commonwealth of australia official …...mr gabriel chan, manager, finance, australia council mr don...

COMMONWEALTH OF AUSTRALIA

Official Committee Hansard

SENATEENVIRONMENT, COMMUNICATIONS,

INFORMATION TECHNOLOGY AND THE ARTSLEGISLATION COMMITTEE

Consideration of Additional Estimates

THURSDAY, 11 FEBRUARY 1999

CANBERRA

BY AUTHORITY OF THE SENATE

INTERNET

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CONTENTS

THURSDAY, 11 FEBRUARY

Department of Communications, Information Technology and The Arts—Program 1—Arts and heritage—Subprogram 1.4—Australia Council . 189Program 2—Film and intellectual property—Subprogram

2.4—Australian Film Finance Corporation. . . . . . . . . . . . . . . . . . 199Program 3—Broadcasting, online and information technology—

Subprogram 3.3—Australian Broadcasting Corporation. . . . . . . . . 200Subprogram 3.5—Australian Broadcasting Authority. . . . . . . . . . . 224

Program 4—Communications—Subprogram 4.3—Telstra Corporation Ltd. . . . . . . . . . . . . . . . . . 236Subprogram 4.2—Australian Postal Corporation. . . . . . . . . . . . . 273Subprogram 4.4—Australian Communications Authority. . . . . . . . 291

Program 3—Broadcasting, online and information technology—Subprogram 3.2—National Transmission Agency. . . . . . . . . . . . . 297Subprogram 3.1—Broadcasting policy, information technology and

regional telecommunications. . . . . . . . . . . . . . . . . . . . . . . . . . 299Program 2—Film and intellectual property—Subprogram 2.1—Film and

intellectual property policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313Program 1—Arts and heritage—

Subprogram 1.1—Arts and heritage policy. . . . . . . . . . . . . . . . . . 321Subprogram 1.8—National Museum of Australia. . . . . . . . . . . . . 322Subprogram 1.1—Arts and heritage policy. . . . . . . . . . . . . . . . . . 346

Thursday, 11 February 1999 SENATE—Legislation ECITA 177

SENATE

ENVIRONMENT, COMMUNICATIONS, INFORMATION TECHNOLOGY ANDTHE ARTS LEGISLATION COMMITTEE

Thursday, 11 February 1999

Members: Senator Eggleston(Chair), Senators Allison, Bishop, Bolkus, Payne and Tierney

Senators in attendance:Senators Mark Bishop, Boswell, Calvert, Cook, Cooney, Crossin,Eggleston, Faulkner, Heffernan, Hogg, Lundy, Payne and Schacht

Committee met at 9.06 a.m.

DEPARTMENT OF COMMUNICATIONS, INFORMATION TECHNOLOGY ANDTHE ARTS

Proposed additional expenditure, $20,127,000 (Document A).Proposed additional expenditure, $8,795,000 (Document B).

In AttendanceSenator Alston, Minister for Communications, Information Technology and the ArtsDepartment of Communications, Information Technology and the Arts—Program 1—Arts and HeritageSubprogram 1.1—Arts and Heritage Policy

Mr Rob Palfreyman, Acting Executive Director, DCITAMr Les Neilson, General Manager, Arts, DCITAMr Craddock Morton, General Manager, Cultural Development, DCITAMr Peter Young, Acting General Manager, Major Performing Arts Review, DCITAMr Bill Henderson, General Manager, Old Parliament House, DCITAMr Brian Stewart, General Manager, Government and Reform, DCITAMs Dawn Casey, Chief General Manager, DCITA

Subprogram 1.4—Australia CouncilMs Jennifer Bott, General Manager, Australia CouncilMs Sarah Gardner, Director, Strategy and Policy, Australia CouncilMr Gabriel Chan, Manager, Finance, Australia CouncilMr Don Baxter, Director, Arts Funding, Australia Council

Subprogram 1.6—National Gallery of AustraliaDr Brian Kennedy, Director, National Gallery of AustraliaMr Alan Froud, Deputy Director, National Gallery of AustraliaMr Kieron Roost, Head of Finance, National Gallery of Australia

ENVIRONMENT, COMMUNICATIONS, INFORMATION TECHNOLOGY AND THE ARTS

ECITA 178 SENATE—Legislation Thursday, 11 February 1999

Mr Phil Rees, Head of Facilities, National Gallery of AustraliaSubprogram 1.7—National Library of Australia

Ms Jan Fullerton, Acting Deputy Director, National Library of AustraliaMr David Toll, Assistant Director-General, National Library of Australia

Subprogram 1.8—National Museum of AustraliaDr William Jonas, AM, Director, National Museum of AustraliaDr Darryl McIntyre, General Manager, National Museum of Australia

Program 2—Film and Intellectual PropertySubprogram 2.1—Film and Intellectual Property Policy

Dr Rod Badger, Acting Executive Director, ITTB, DCITADr Alan Stretton, Chief General Manager, DCITAMs Megan Morris, General Manager, Film and Online Content, DCITA

Subprogram 2.4—Australian Film Finance CorporationMs Catriona Hughes, Chief Executive Officer, Australian Film Finance Corporation (FFC)Mr Michael Ward, Policy Manager, Australian Film Finance Corporation (FFC)Mr Michael Malouf, Financial Controller, Australian Film Finance Corporation (FFC.

Program 3—Broadcasting, Online and Information TechnologySubprogram 3.1—Broadcasting Policy, Information Technology and Regional Telecommunica-tions

Dr Rod Badger, Acting Executive Director, ITTB, DCITADr Alan Stretton, Chief General Manager, DCITAMr Colin Lyons, General Manager, Public Broadcasting, DCITADr Simon Pelling, Acting General Manager, Digital TV Group, DCITAMr Michael Sutton, General Manager, ICID, DCITADr David Williamson, General Manager, Networking the Nation, DCITA

Subprogram 3.2—National Transmission AgencyMr Greg McAdoo, Assistant General Manager, National Transmission Agency

Subprogram 3.3—Australian Broadcasting CorporationMr Brian Johns, Managing Director, ABCMr Russell Balding, Head, Finance and Business Services, ABCMr Andy Lloyd-James, Head, National Networks, ABCMs Sue Howard, Head, Regional Services, ABCMr Colin Knowles, Head, Technology Strategy and Development, ABC

Subprogram 3.4—Special Broadcasting Service

Ms Maureen Crowe, Head of Resources, SBS

Mr Nigel Milan, Managing Director, SBS

Mr Jon Torpy, Manager, Finance, SBS



Subprogram 3.5—Australian Broadcasting AuthorityMr Gareth Grainger, Acting Chairman, ABAMr Giles Tanner, General Manager, ABAMs Andree Wright, Director, Policy and Content Regulation, ABAMs Jonquil Ritter, Director, Planning and Licensing, ABA

Subprogram 3.6—National Office for the Information EconomyMs Mary Burton, NOIEMr Paul Twomey, Chief Executive Officer, NOIEMs Fay Holthuyzen, Deputy Chief Executive Officer, NOIEMr Tim Field, Chief General Manager, Government and Community Strategy, NOIE

Subprogram 3.7—Office for Government OnlineMs Glenys Roper, Chief Executive, OGOMr Warren Richter, Chief General Manager, OGOMs Susan Page, Chief General Manager, OGOMr Steve Fielding, General Manager, OGOMr Gary Allan, General Manager, OGOMr Peter Anderson, General Manager, OGO

Program 4—CommunicationsSubprogram 4.1—Telecommunications and Postal Policy

Dr Rod Badger, Acting Executive Director, ITTB, DCITAMr John Neil, Acting Chief General Manager, Telecommunications Division, Telecommuni-cations and Postal PolicyMr James Cameron, Acting General Manager, Telecommunications Competition andConsumer Branch, Telecommunications Division, Telecommunications and Postal PolicyMs Patricia Barnes, Acting General Manager, Enterprise and Radiocommunications Branch,Telecommunications Division, Telecommunications and Postal PolicyMr Richard Thwaites, General Manager, International Branch, Telecommunications Division,Telecommunications and Postal PolicyMr David Luck, General Manager, Research, Statistics and Technology, Telecommunicationsand Postal Policy

Subprogram 4.2—Australian Postal CorporationMr Gerry Ryan, Corporate Secretary, Australian Postal CorporationMr Michael Talbot, Group Manager, Retail, Australian Postal CorporationMr John Slight, Group Manager, Network Renewal, Australian Postal Corporation

Subprogram 4.3—Telstra Corporation LimitedMr Graeme Ward, Group Director, Regulatory and External Affairs, Telstra CorporationLimitedMr John Stanhope, Director, Finance, Telstra Corporation Limited



Mr Lawrence Paratz, Executive General Manager, Network and IT Infrastructure, TelstraCorporation LimitedMr Andrew Day, Managing Director, Sales, Telstra Corporation LimitedMs Deena Shiff, Director, Regulatory, Telstra Corporation LimitedMs Deanne Weir, Counsel, Regulatory and External AffairsMr Peter Frueh, Managing Director, Business Development, Telstra Corporation Limited

Subprogram 4.4—Australian Communications AuthorityDr Bob Horton, Deputy Chairman, Australian Communications AuthorityMr Geoff Luther, Acting Senior Executive Manager, Radiocommunications Group,Australian Communications AuthorityMr Peter Stackpole, Executive Manager, Customer Affairs Group, Australian Communica-tions AuthorityMs Roslyn Kelleher, Executive Manager, Consumer Affairs Group, Australian Communica-tions AuthorityMr Barry Matson, Executive Manager, Radiofrequency Planning Group, AustralianCommunications AuthorityMr Norm O’Doherty, Acting Executive Manager, Telecommunications Licensing Group,Australian Communications AuthorityMr Jeremy Chandler, Acting Executive Manager, Corporate Management Group, AustralianCommunications AuthorityMr Ted Benjamin, Director, Consumer AffairsMr John Armstrong, Customer Affairs CouncilMr Roger Levy, Group Manager, DNF Analysis Group

Program 5Dr Kay Daniels, General Manager, Intellectual Property Branch, DCITAMr Arthur Blewitt, Chief General Manager, Corporate and Coordination, DCITAMr Lennard Marsden, General Manager, Corporate Services, DCITAMr Neville Stevens, Secretary, DCITA

Department of Finance and Administration ObserversMs Judy Daniel, Director, Recreation, Culture and Communications, Outcomes Advice UnitMr Terry Walford, Assistant Director, Recreation, Culture and Communications, OutcomesAdvice UnitMr Mark Munro, Finance Officer, Industry Sector, Output Purchasing UnitMs Louise Seeber, Director, Industry Sector, Output Purchasing UnitCHAIR —I declare open this public meeting of the Senate Environment, Communications,

Information Technology and the Arts Legislation Committee, considering the additional esti-mates in respect of the year ending 30 June 1999.

On 26 November 1998, the following documents were referred to legislation committeesfor examination and report: Particulars of Proposed Additional Expenditure for the Serviceof the Year Ending on 30 June 1999, document A; Particulars of Certain Proposed AdditionalExpenditure in respect of the Year Ending on 30 June 1999, document B; Particulars of



Proposed Additional Expenditure in relation to the Parliamentary Departments in respect ofthe Year Ending on 30 June 1999, document C; Advance to the Minister for Finance; Issuesfrom the Advance to the Minister for Finance as a Final Charge for the Year Ended 30 June1998; Provision for Running Cost Borrowings, Statements and Supporting Applications ofIssues dated March, April, May and June 1998, tabled on 23 June, 30 June and 11 November1998; and Final Budget Outcome 1997-98 presented out of session on 18 September 1998 andtabled on 10 November 1998. Reference may also be made to annual reports for the 1997-98year that have been received.

Following the hearings, the committee will prepare its report for the Senate to be tabled on9 March 1999. Unless otherwise stated, responses to questions placed on notice at the hearingtoday can be sent into the committee secretariat until the close of business on Friday, 26 March1999.

I welcome the minister, Senator the Hon. Richard Alston, and officers from theCommunications, Information Technology and the Arts portfolio. Departmental officers willnot be asked to comment on the reasons for policy decisions or the advice they may havetendered in the formulation of policy or to express a personal opinion on matters of policy.

Senators should note that the agenda for the Communications, Information Technology andthe Arts portfolio has been somewhat altered. Officers of several subprograms will not beattending and those subprograms are the Australian National Maritime Museum, the AustralianFilm Television and Radio School, National Film and Sound Archives, Film Australia and theAustralian Film Commission.

The committee will begin with subprogram 1.4, the Australia Council, but I believe thatSenator Lundy and Senator Bishop wish to ask some general questions.

Senator LUNDY—I just want some clarification. I have some general questions for thewhole department, DOCITA, and also some general arts questions. I understand Senator Bishophas general questions for the whole department as well. Is it your intention that we can proceedon general questions for the whole department or just general questions for art.

CHAIR —If the officers are not here, you probably need to confine yourself to the questionswhich the relevant officers are here for, but I do remind you that these are additional estimatesand they are focused on financial matters rather than on a general policy discussion.

Senator LUNDY—Thank you, Mr Chairman. Are the officers here to answer generalquestions with respect to the department?

Mr Stevens—Senator, it depends on the questions, to be perfectly honest.Senator MARK BISHOP—My question is on the PBS. Will you be dealing with that, Mr

Stevens?Mr Stevens—Yes, and Mr Marsden, our financial expert, is here.Senator MARK BISHOP—Just a couple of quick questions: what is the need for an extra

$3 million for running costs in the program area for 1998-99?Mr Stevens—Can you give me the page reference for the document?Senator MARK BISHOP—It is right at the beginning. It is page 75, subprogram 3.1. It

shows additional estimates of $3 million being sought. It is right down on the bottom table.Mr Marsden —That $3 million relates to rollover of unspent moneys from the previous year.

It is broken into a number of areas. We picked up a new function in the administrativearrangement orders from the former Department of Industry, Science and Technology. There



is $988,000 there. An amount of $236,000 relates to the RTIF—the Regional Telecommunica-tions Infrastructure Fund. The rest of the moneys relate to the department’s programs.

Senator MARK BISHOP—What was the last thing you said, Mr Marsden?

Mr Marsden —The balance of the $3 million, which is almost $1.9 million, relates to thedepartment’s underspend from the previous financial year.

Senator MARK BISHOP—Why is there that underspend?

Mr Marsden —The budget statements are prepared in April, two months before the financialyear ends, so we take a projection of what we think will happen. When we get to the end ofthe financial year and we have additional estimates, we make the final adjustment for whatactually happened in that period of time. All the departments have flexibility under the currentrunning costs systems to carry over funds. In that way we can manage our contracts, ourconsultants and our expenditure more sensibly and have a more even pattern with expenditure.

Senator MARK BISHOP—Do carryover funds or unspent funds have to be reappropriated?

Mr Marsden —That is correct.

Senator MARK BISHOP—Staying on that table: why is there a significant increase inrunning costs from an actual figure of $8.4 million up to $15.3 million? That strikes me asa fairly big increase.

Mr Marsden —I do not have with me the difference between the actual outcome for 1997-98and the budget. What I have explained is the AEs increase. Can I take that first portion onnotice and come back to you?

Senator MARK BISHOP—The apparent increase from $8 million to $15 million?

Mr Marsden —Yes. What I have already explained so far is just the $3 million increase,which is the additional estimates portion of it. What you are asking about is the differencebetween the actual outcome for 1997-98 and the budget—the balance of that difference. Iwould have to take that portion on notice. I do not have it with me.

Senator MARK BISHOP—That is fine.

Mr Stevens—Mr Chairman, with regard to the arts questions, the opportunity exists thisevening under program 1.1 for Senator Lundy to ask any general arts questions that she mightwish to ask. We will have more officers here this evening.

Senator LUNDY—Could you repeat that, Mr Stevens?

Mr Stevens—Subprogram 1.1 is scheduled for 8.30 tonight and that would provide theopportunity to ask general arts questions, if that is convenient for you.

Senator LUNDY—Can I just clarify a couple of issues as to which area they fall under.We have had difficulties with this before. I have questions with respect to follow-on from thechanges to the Copyright Act to allow parallel importation of CDs. I know we had somediscussion last time about whether that fell under intellectual property or, indeed, generalquestions. The other area is with respect to moral rights and performers’ rights and generalcopyright issues. Can you advise me under which subprogram they are best directed?

Mr Stevens—I think we will take them under subprogram 2.1, which is scheduled for 8o’clock tonight. We will have officers available to answer those questions.

Senator LUNDY—Thank you. That includes general issues relating to copyright?

Mr Stevens—Yes.



Senator LUNDY—With respect to a press release circulated by the Minister for the Artsand the Centenary of Federation, Peter McGauran, relating to sponsorship for cultural activities,can you advise me under which subprogram those questions are best directed?

Mr Stevens—Subprogram 1.1.CHAIR —Is that all the general questions?Senator MARK BISHOP—I have some questions for the minister on one of his staffers,

Mr Fletcher. Minister, there was a newspaper report in theAustralian—I have not got the date;I have got the report—about your employment of Mr Fletcher and a press release by Mr Smithfrom the ALP. When did Mr Fletcher first come to work for you, in what capacity and whatwas his classification?

Senator Alston—He commenced with me in about May 1996. I cannot recall precisely whathis responsibilities were at that time, but he has always been in and around the area oftelecommunications. He has a corporate finance and strategy background, so he was involvedwith privatisation issues from a very early stage.

Senator MARK BISHOP—Telstra privatisation issues?Senator Alston—Yes.Senator MARK BISHOP—Other ones?Senator Alston—I do not think there was much left to privatise after your mob had a go.Senator MARK BISHOP—NTA?Senator Alston—No.Senator MARK BISHOP—So only Telstra privatisation?Senator Alston—Yes, I think so.Senator MARK BISHOP—In what other areas did he give policy advice to you?Senator Alston—Given the convergence of telecommunications into the IT sector, he has

inevitably expanded his levels of activity in that direction to the point where his current formalposition is head of IT&T. He has never, to my knowledge, had any direct responsibility foror involvement in the media or the arts sectors.

Senator MARK BISHOP—So he is head of IT&T. Is that a political or public serviceposition?

Senator Alston—He is an employee of the minister’s office. He is a senior adviser.Senator MARK BISHOP—Initially in privatisation involved in Telstra, and now head of

IT&T, with no media or arts involvement?Senator Alston—Yes.Senator MARK BISHOP—Is there any other area in which he advises you on policy

matters?Senator Alston—No, I think it has overwhelmingly been Telstra. There are so many things

that feed off Telstra that it is pretty much a full-time job keeping track of all the telecommuni-cations issues. He has been the main one in that area for a couple of years.

Senator MARK BISHOP—Does he have any liaison role with the department?

Senator Alston—No more or less than any member of staff would be in touch with thedepartment. There is no higher status accorded to a senior adviser in that regard. I presume



some of them are in daily contact with the department; others not so much. It depends onissues but there is nothing special about Mr Fletcher’s arrangements.

Senator MARK BISHOP—I think you said at the outset that he had a background infinance and strategy development in the private sector.

Senator Alston—He worked for a period for TNT as an adviser to the managing director.He also worked for Mallesons solicitors. He did a degree at Colombia. He might have workedfor some other law firm. Certainly, his expertise has been more in the corporate businesscommercial area.

Senator MARK BISHOP—The IT side of corporate business commercial or the financeand legal side?

Senator Alston—IT is only a relatively new phenomenon in terms of traditional corporatestructures.

Senator MARK BISHOP—He has been around a while.Senator Alston—Yes, but I do not think with that title. I doubt that there would have been

too many companies that would have had a head of IT, even as recently as 1996.Senator LUNDY—I am sorry, Minister, that is a ridiculous statement.Senator Alston—Under that title, I am saying.Senator LUNDY—No, that is a ridiculous statement.Senator Alston—All right, it is your opinion that it is ridiculous.Senator MARK BISHOP—Mr Fletcher had private or consultant interests as well, didn’t

he?Senator Alston—I am not aware of any private consultancy interests other than the matter

that he brought to my attention in relation to Channel 9.Senator MARK BISHOP—That is what I am talking about. What was the detail of what

he brought to your attention, Minister?Senator Alston—In 1997 he discussed with me the possibility of assisting in the production

of a televised debate on the Nine Network, given that he has had a longstanding and activeinvolvement in debating and he has been in a number of televised debating contests—andcertainly a number of other official ones. He did discuss with me the possibility of beinginvolved in that. Subsequently, he was asked to provide some advice in relation to theMelbourne Comedy Festival debate. He brought my attention to that and sought mypermission. I said I had no problem with it.

In January this year he advised me that he had been retained to act as a consultant to theNine Network in relation to up to four televised debates. He told me it would be in conjunctionwith two partners, each of whom would be paid for their involvement. He said that he wouldprobably be speaking in one of the debates. If that were the case, he would be describedsimply as a Sydney lawyer, without reference being made to his position on my staff.

He has been onGood News Week, which is an ABC program, on at least one occasion, ashas probably half the parliament at one time or another. Given that his first involvement inthis area, and indeed the discussions with Channel 9, predated his coming on to my staff, andgiven that he was not involved in media policy, it seemed to me that there was no conflictof interest. I authorised him to go ahead and, as I understand it, that has occurred. Nothinghas gone to air as yet.



Senator MARK BISHOP—He came to work for you around May 1996. He has specificallybrought to your attention, post his employment with you, three areas of private interest withTV broadcasters, either Channel 9 or the ABC. Those three specific areas he has brought toyour attention were some debates, some work for the Melbourne comedy organisation and thenthe three—

Senator Alston—The Melbourne Comedy Festival is a big event that goes on for some days,maybe weeks, in Melbourne.

Senator MARK BISHOP—Then four debates planned some time into the future. Whenare those four debates planned to be in the future?

Senator Alston—All I know is that they are all in the can. I am not sure.

Senator MARK BISHOP—They have all been concluded?

Senator Alston—I think so. I will check on the precise detail of that. He simply said to methat they had finished filming but maybe that is one instead of a number. I assumed that meantthe lot, but I will check on that.

Senator MARK BISHOP—Do you know when the debates will go to air?

Senator Alston—No, I do not.

Senator MARK BISHOP—Are you aware of their content?

Senator Alston—No.

Senator MARK BISHOP—Are you aware whether they are going to be broadcast onlyon Channel 9 or are they for—

Senator Alston—I think it is a Channel 9 exercise. Unless Channel 9 on-sell the rightsbecause of popular demand, I presume that is where they will stay.

Senator MARK BISHOP—Did you take any advice from your departmental officials aboutpotential conflict of interest in Mr Fletcher’s involvement in these three areas and his workas your senior policy adviser?

Senator Alston—I did have discussions with others, including people in the department,as to whether it was appropriate and whether there was any conflict of interest. With MrFletcher having put it on the table up front it was obviously important that we carefullyconsider that issue.

Senator MARK BISHOP—Did you receive any written advice arising from those matters?


Senator MARK BISHOP—Did you refer the issue to PM&C?


Senator MARK BISHOP—Were any notes kept of those discussions you had with yourdepartmental officials on potential conflict?

Senator Alston—Not by me.

Senator MARK BISHOP—By them?

Senator Alston—I do not know.

Senator MARK BISHOP—Can you make inquiries and let us know?

Senator Alston—Yes.



Senator MARK BISHOP—It is the bottom line that you were and are satisfied that thereis no potential for conflict between Mr Fletcher’s policy role and his apparent ongoing businessactivities in the media?

Senator Alston—I would not call it ‘business activities’. Essentially, he has been achampion debater for a number of years because of things like world series debating and otheractivities, even on commercial television.

Senator MARK BISHOP—Let us stop there. I had presumed that there was rewardinvolved in the preparation and filming of the debates and the work for the Melbourne ComedyFestival. Are you telling me there is no reward?

Senator Alston—I do not know about that. I do know that there was remuneration involvedfor the current project, but the first matter that he brought to my attention—proposedinvolvement and assisting in the production of a televised debate on the Nine Network—didnot come to pass. The Comedy Festival: I do not know the nature and extent of his involve-ment or whether there was any money involved.

Senator MARK BISHOP—Can you make inquiries and advise us on notice?Senator Alston—Yes.Senator MARK BISHOP—Can you also make inquiries as to the nature of the debates?Senator Alston—Yes.Senator MARK BISHOP—The companies that contracted to do this work: could you

provide us with the details of their corporate background?Senator Alston—The companies that?Senator MARK BISHOP—Did Mr Fletcher do this work as a consultant or adviser or what-

ever and receive contract payment or was it done through a corporate structure?Senator Alston—You mean did he do it personally?Senator MARK BISHOP—Yes.Senator Alston—Okay, I will find that out.Senator MARK BISHOP—And advise us of that?Senator Alston—Yes. I have no reason to think that there is a corporate structure involved,

but I will find out.Senator MARK BISHOP—If there is, could you provide us with the details of that

corporate structure?Senator Alston—Yes.Senator MARK BISHOP—Thank you, Minister.Senator LUNDY—I want to follow up a point that you made during that discourse,

Minister, when you said that there was a clear distinction between IT&T and media and thatthat was part of why you felt that there was no conflict of interest. Can you explain to thecommittee what you see as the points of distinction between IT&T and media in a policysense?

Senator Alston—Essentially, the portfolio has always been broken down intotelecommunications on the one hand and broadcasting on the other with a few other bits andpieces thrown in—like post, without willing to reflect adversely on them. That is the broaddichotomy. Paul Fletcher was always on the telecommunications side.



Senator LUNDY—So, with respect to issues like convergence of information technologies,media and telecommunications, on which you wax lyrical on many an occasion, are you sayingthere is no crossover between those policy areas in your office?

Senator Alston—We still have a separate responsibility for broadcasting. Although you canpotentially argue that IT&T is all pervasive and will get even more so, and that the day maycome when there is no broad distinction to be drawn any more between any level oftechnology activity, I think we are still very much at a stage where we have separate acts ofparliament dealing with separate aspects and we have separate policy advisers. Given that attimes the arts adviser is probably going to be tripping over technology issues, there is stilloverwhelmingly a broad distinction that can be drawn between the various policy areas.

Senator LUNDY—Has Mr Fletcher been involved in any of the policy work relating todatacasting and digital TV?

Senator Alston—I do not think so. I will find out, but I do not think so.

Senator LUNDY—Has Mr Fletcher been involved in any policy work relating to the Internetand converging IT&T services across that new medium?

Senator Alston—Again, I do not recall it, but overwhelmingly his work has revolved aroundtelecommunications. It is almost a full-time job keeping track of Telstra in itself, let alone allthe issues that keep getting thrown up in that area, and that is really his area of expertise. AsI say, he may come across a number of other matters incidentally, but we have never soughtto move him out or away from that area because he is much more at home with telecom-munications. Sure, it is a platform for IT and a whole range of other things, and no doubtincreasingly there will be convergences in a policy sense, but you would not say that he hasgiven advice on broadcasting issues.

Senator LUNDY—With respect to his work in telecommunications and Telstra, givenTelstra’s quite strong presence in IT&T in the Internet new services, would he have involvedhimself in that area, in policy, in Telstra’s Internet technology?

Senator Alston—Big Pond?

Senator LUNDY—Big Pond was a product, yes, as well as their proposed data mode ofoperation, their data networks, management of Telstra products on line generally, that sort ofarea, Minister?

Senator Alston—Apart from keeping up to date, I think it is fair to say that those have notbeen areas of heated controversy and the immediate policy issues have generally not involvedmuch consideration of Telstra’s IT activities. I do not recall offhand that he has had anythingto do in those areas, even if he had a policy responsibility for it, which I do not think he had.

Senator LUNDY—So you are telling me that you have a telecommunications adviser forIT&T who does not involve himself in what Telstra is doing on line? That is what you havejust said.

Senator Alston—I said he would keep abreast of developments but, in terms of offeringadvice on current policy issues, I do not believe there are any current policy issues that requireour attention in terms of Telstra’s Internet activities.

Senator LUNDY—Minister, could you brief the committee on Telstra’s relationship withChannel 9?

Senator Alston—I am not aware of any relationship.



Senator LUNDY—You are not aware of ninemsn and the relationship between Telstra andChannel 9 with respect to the online product?

Senator Alston—I believe ninemsn is a joint venture between Microsoft and Channel 9.Senator LUNDY—Is Telstra involved in that relationship?Senator Alston—No, not that I am aware of.Senator LUNDY—Do you have any advisers here who could advise you as to the

relationship between Telstra and Channel 9?Senator Alston—No. You could ask Telstra later on.Senator LUNDY—Yes, I suspect I will. Minister, it is quite ludicrous for you to sit there

and suggest that you have an IT&T adviser who does not involve himself in matters of theInternet in relation to Telstra. I suppose it is a reflection on the previous questions that SenatorBishop asked. It is very clear that both Channel 9 and Telstra have a common interest in anonline venture and that the potential for conflict by having a strategic adviser providing youwith advice in relation to this matter points only to one outcome.

Senator Alston—Sorry, what is that joint involvement?Senator LUNDY—They have a corporate alliance between both Channel 9 and Telstra with

respect to the online product produced by Channel 9.Senator Alston—Do they? What is it for?Senator LUNDY—I will leave that up to you to get advice on, Minister. If you are not

aware of it then I am gravely concerned about your grip on your portfolio. Could you takeon notice my request to provide the committee with not only details of that relationship butalso all of the scope of work Mr Fletcher has done with respect to Telstra’s online presence,particularly in relation to Channel 9.

Senator Alston—Yes.CHAIR —Any other questions, Senator Lundy?Senator LUNDY—I have some general questions with respect to the program for

remediation for the Y2K problem. First of all—CHAIR —Are the appropriate people here?Mr Stevens—That is subprogram 3.7.Senator LUNDY—Yes, subprogram 3.7.Mr Stevens—Are you talking about the department itself and Y2K, or are you talking about

the department’s role more generally in government remediation?Senator LUNDY—Initially I want to explore the activities of the department per se such

as the ACA and others, but also some questions from a corporate sense within the departmentabout management of Y2K, so both areas.

Mr Stevens—Can we do it under subprogram 3.7? I will have the officers available at thatpoint.

Senator LUNDY—Are both those issues in subprogram 3.7?

Mr Stevens—Yes.

Senator LUNDY—That’s fine.CHAIR —Do you have anything else, Senator Lundy?



Senator LUNDY—No, I am happy to proceed to subprogram 1.4, the Australia Council.[9.41 a.m.]

Program 1—Arts and heritageSubprogram 1.4—Australia Council

CHAIR —We welcome Jenny Bott to her first estimates, I believe.Senator LUNDY—Ms Bott, thank you for being so patient. Following the coalition’s 1998

budget, a report in theFinancial Reviewsaid the Australia Council’s chair, Margaret Seares,called on the government to reverse a $15 million hole in arts funding after it had sustainedsavage cuts in previous coalition budgets. On 11 December, Ms Bott, you expressed yourconcerns about the GST. And in the 1998 election policy the coalition subsequently pledgedsome more money to the Australia Council. My question is: is this just another smoke andmirrors exercise by the government, ripping holes in the funding and then backfilling it byannouncing some new or additional funding?

Senator Alston—Are you asking me?Senator LUNDY—Yes, Minister.Senator Alston—What was the contribution that you say constitutes the compensation?Senator LUNDY—I have asked you a question about—Senator Alston—I thought you were addressing it to Ms Bott.Senator LUNDY—You pull money out of the arts budget and then you promise to put it

back in. What is—Senator Alston—What are you talking about? What did we promise to put back in?Senator LUNDY—What is your government’s approach? Are you going to be putting some

new or additional funding back in?Senator Alston—To the Australia Council?Senator LUNDY—Yes.Senator Alston—We are committed to giving them money. They get a proportion of the

$10 million of the contemporary music package. There is additional funding for emerging ar-tists and for the regional festivals program and, to the extent that there is additional fundingrequired for the major organisations for which the Australia Council has responsibility underthe Major Organisations Fund, then there would be further money forthcoming.

Senator LUNDY—Sorry; could you say that again? I could not understand you.Senator Alston—We have announced an inquiry into the major organisations, chaired by

Dr Helen Nugent. That will involve all of the members of the Major Organisations Fund ofthe Australia Council, together with symphony orchestras and a number of other artsorganisations. To the extent that there is ultimately a need for further funding to correct someof the endemic problems that have been besetting a number of the major organisations inrecent years, then there will be additional funds flowing which will probably go through theAustralia Council.

Senator LUNDY—Have you allocated a specific amount for that?Senator Alston—No, I am just saying there is an inquiry that is really only just getting

under way. If the result of that inquiry is that there is a need for additional funding then thatfunding would go via the Australia Council.



Senator LUNDY—Has there been any forward allocation of that to date or is that just apromise?

Senator Alston—No, I am just saying ‘to the extent that’. It is dependent upon the outcomeof the review and any advice that we get and any decision we make. I am just flagging thatthat is another possible area, but we do have commitments to give additional funding throughthe Australia Council in the three areas I have mentioned. Apart from the cut in the 1996budget—which was actually less in the area of the arts and the Australia Council than in mostother areas of government—I do not think you can say there has been much slashing andburning going on in this area. In fact, most of the criticism around the traps is that the artshas been relatively well protected.

Senator LUNDY—Minister, there is no doubt that the reduction in the arts budget, despitewhat you say, has been significant, and now you have identified a range of areas where youare looking at backfilling it. The review that you mentioned—

Senator Alston—It is not a backfill; these are new initiatives in new areas.

Senator LUNDY—You can call it what you like but it is replacing funding that youpreviously took out.

Senator Alston—If you just want to talk in very general terms about bottom lines you can,but that skates over the fact that the arts is a very dynamic area where some responsibilitiesbecome less important over time. Arts companies come and go. It can be quite fragile. Youneed to be prepared to respond in areas where there is a need for assistance.

Senator LUNDY—Given you have raised that point about arts organisations and companiescoming and going, can you advise the committee how many have actually gone over the lastthree years as a result of cuts to the arts budget and their inability to attain support from theAustralia Council because of the diminished pool of funding available?

Senator Alston—The Australia Council has to make hard decisions from time to time, andit did withdraw funding from several theatre companies in South Australia. But I do not thinkthe Australia Council would for a moment say that that was because of a lack of fundingcapacity as a result of arts cuts; they would say it was simply a reflection of the fact that thosecompanies were not delivering the goods. Unpalatable as that might be to those involved, ifthe numbers are not there, if the performances are not being patronised, you have got to maketough decisions.

Senator LUNDY—Minister, you make it very difficult for me to resist the temptation todissect your logic that a smaller pool of funding somehow relates to the ability of the AustraliaCouncil to be more discerning with respect to the quality of arts contributions, but I will moveon to my next question nonetheless.

Ms Bott, does the council believe it still enjoys the freedom or independence to manage thisnew funding pledge by the government during the last campaign or is there now a closerrelationship with the minister’s office and involvement in the decisions of the AustraliaCouncil?

Ms Bott—I would first of all like to say that this is my fourth day in the job, so I hope youwill forgive me if, at these first meetings, I defer most answers to my colleagues here at thetable.

Senator LUNDY—Thank you.



Ms Gardner—In relation to those funding programs, they are still decided independentlyof government. They are independent programs that the Australia Council administers underits act.

Senator LUNDY—So, when the minister talks about this review process that is coming up,that some new funding may or may not emerge, has there been any discussion with theminister’s office about how in fact that new funding will eventuate? You have just said it willbe distributed in accordance with the act, but under what changed criteria in the circumstances?

Ms Gardner—In the normal reporting to parliament we have reported back on the outcomesof the funding in those. We are now into the last of the three years. That has been the onlyformal reporting process—as we would do for all other moneys for which we are responsible.

Senator LUNDY—Just on the question of timing with this promise for additional fundingfor this review that is taking place at the moment, Minister, did you tell the committee whowas conducting that review?

Senator Alston—Yes. Dr Helen Nugent has actually stood down as deputy chair of theAustralia Council, but she was in that position until late last year. We are very keen to havethe accumulated expertise of the Australia Council in general and Dr Nugent in particular. Soyou can see the extent to which there is a close working relationship. Obviously, we wouldexpect Dr Nugent to reflect the views of the council in that process—although not exclusivelyby any means, and that is why she has stood down formally from the position. She willcertainly bring to the position an awareness of the insights that are available through theAustralia Council.

Senator LUNDY—Thank you. How does the timing of the review relate to your fundinground for the Australia Council?

Senator Alston—I would need to go back and say that I have not said that there will beany funds forthcoming. I have simply said that, to the extent that the outcome of that reviewis that there is a need for additional funding, then they would be moneys that would bechannelled through the Australia Council.

Senator LUNDY—No; my question does not presuppose there will be funding.Senator Alston—But if you want to know the timetable I think Dr Nugent does not actually

formally commence the task until mid-February. We are expecting her report midyear, so wehave some months to go. Yes, 15 February; the first meeting is likely to be held on the 19th.

Senator LUNDY—So Dr Nugent reports back midyear to the Australia Council or to you?Senator Alston—No, not to the Australia Council; to the government.Senator LUNDY—To the government?Senator Alston—Yes.Senator LUNDY—So she reports back to you, and then you will make a decision on what

is advised, and then you will tell the Australia Council. I am just trying to clarify processes.Senator Alston—I expect I will be pretty much aware as we go along of the direction in

which it is travelling. There will be, presumably, a number of hearings and consultations, soit is not a matter at some distant stage in the future of formally advising the Australia Councilof the outcome; we will want to be talking to them on a regular basis.

Senator LUNDY—I appreciate that, but what I am trying to ascertain is, once that has beencompleted, what the actual formalities are. There will be reporting to you, and you thenadvising the Australia Council of the government’s recommendations arising from that



independent review. What is the actual process? When will the Australia Council be in aposition to bring these issues into their formal consideration?

Senator Alston—Obviously no one can make commitments until the government has madea decision, and we cannot do that until we get the recommendation. So the process will involveDr Nugent presenting a report to the minister; I will then consider it and, presumably, takeit to cabinet, but again it all depends, I suppose. Once a decision has been made and if thereis additional funding involved, we will be talking with the Australia Council about the mostappropriate means of providing that.

Senator LUNDY—At that point where you advise the Australia Council of whether or notthere is more funding available, what capacity do you have to place contingencies on thecouncil or requirements on the council? Do you understand what I mean? What conditionscan you attach?

Senator Alston—Can we attach strings to the funding?

Senator LUNDY—Yes. And it is a question as much to the Australia Council as it is toyou because of the requirements and the structure of their act.

Senator Alston—I think it is fair to say that we are not obliged to give any particular levelof funding to anyone, including the Australia Council, and, to the extent that we do, we areentitled to attach strings to it. Having said that—and you never want to give a blank chequein advance—I expect that this high level committee will come up with some pretty sensiblerecommendations. Therefore, they are likely to be ones with which the Australia Council itselfwill agree. So there will not be any likelihood of us saying, ‘Here’s money, but you will haveto take it under conditions which you do not like.’ It is more likely to be a matter of workingout the best way of implementing the recommendations. We would very much look to themto have a critical role in that process.

The whole idea of appointing Dr Nugent as opposed to perhaps someone who was outsidethe arts entirely or someone who was from another organisation in a previous incarnation isone that we considered but, at the end of the day, we thought that Dr Nugent’s expertise andbackground was uniquely suited to the task. So I think to that extent it is a vote of confidencein the Australia Council which will follow through into cooperative implementation of therecommendations.

Senator LUNDY—Thank you, Minister. The main point of my question was not whetheror not the Australia Council will be forced to abide by conditions you attach but whether ornot it was possible for you to attach conditions. You have just said it is. Can I ask theAustralia Council what your response to that is with respect to the act and your ability to makedecisions according to the funding you receive from government, and whether you agree ordisagree to only take funds on a conditional basis from government?

Ms Gardner—Under the act, the council is responsible for making the decisions on specificgrants to individuals or organisations, but the government can provide broad policy adviceeither on base funding or on specific initiatives that it might initiate itself.

Senator LUNDY—So that is confirmation that you can provide conditional funding. Interms of the government guiding the Australia Council’s agenda, would that additional fundinghave to be outside the existing grants program as governed by your act to have that degreeof impact or involvement?

Ms Gardner—As I say, the broad policy guidelines would be applied to particular areas.For example, in relation to emerging artists, there was a specific general outcome that the



government sought to achieve through that funding. But the specifics of who actually thenreceives each of the individual grants under that program is entirely within the AustraliaCouncil’s ambit.

Senator LUNDY—I have one final question with respect to that process. Given we nowhave got a bit of an idea of the timing—although it depends, I guess, on the minister andcabinet and those sorts of decisions—presuming that the Australia Council will get someindication about the government’s response to this review in the latter half of this year, howdoes that relate to your funding timetable or cycle?

Ms Gardner—The vast proportion of the arts funding programs, as you suggest, have fixedclosing dates and decision dates. In relation to the major organisations, however, they operateon a triennial basis, so they do not fall into that same timetable.

Senator LUNDY—So when does that triennium come around, or is it staggered for eachorganisation?

Ms Gardner—They are on the same triennium. We are in the process of looking at the nexttriennial agreements at the moment.

Senator LUNDY—When does that process close off? When do you make your decisionson the next triennium funding?

Ms Gardner—As I said, they are under review at the moment. Obviously, from anadministrative point of view, they are staggered to take into account the time required to nego-tiate each of those forward agreements.

Senator LUNDY—You still have not answered my question. When?

Ms Gardner—As I said, the next three-year agreements are being negotiated now for thisfinancial year.

Senator LUNDY—For this financial year?

Ms Gardner—And for the next two after that.

Senator LUNDY—Right. So that process will be completed by the end of this financialyear?

Ms Gardner—That is my understanding.

Senator LUNDY—For funding to allow them to be funded for the next triennium—for threeyears.

Ms Gardner—The forward triennial agreements should be completed by the end of thisfinancial year.

Senator LUNDY—So from July this year those organisations which are getting triennialfunding will know what their next triennial funding is?

Ms Gardner—Yes.

Senator LUNDY—Thank you. That means that any issues arising out of the review thatis taking place, headed by Dr Helen Nugent, will not impact on that triennium funding round?

Ms Bott—I would say that, while it will not affect the initial agreements, it may well bethat there are some supplementary arrangements.

Senator Alston—It will not affect it adversely.

Ms Bott—No.



Senator LUNDY—I am not suggesting it will affect it adversely; I am just exploring thetiming of it. Minister, you can appreciate you are giving a very strong impression here: youhave embarked upon a review, you have alluded to the fact that there will be potentialadditional funding—and you have said lots of positive things about that today—but, becauseof the timetable of the triennial funding round, all of those organisations will be excluded fromparticipating in any potential additional support that the government is providing the AustraliaCouncil.

Senator Alston—No. Why is that?Senator LUNDY—Can you explain what opportunities there will be for those organisations

which will have just ticked off on their triennial funding arrangements to access any newinitiatives?

Senator Alston—Major organisations?Senator LUNDY—Beneficiaries of the triennial funding.Ms Gardner—The agreements with the major organisations are for a base level of funding.Senator LUNDY—Yes.Ms Gardner—It does not prevent additional assistance through other programs or other

initiatives of the council or the government.Senator LUNDY—Okay.Ms Bott—I think there are two points of clarification. Firstly, the inquiry to which the

minister is referring is not only looking at organisations that are part of the major organisationsfund; it is also looking at organisations beyond it such as the opera conference and the ABCorchestras. Secondly, as has already been said, the triennial agreements are about base fundingand certainly do not preclude additional grants which may be considered as part of this inquiry.

Senator LUNDY—Do you have any time frames or plans on which to embark upon asupplementary round of funding arising out of the review?

Ms Bott—There are no specific plans at this point until we see the outcome of the inquiryand are able to comment on that.

Senator LUNDY—Minister, as part of this review is it also an option that recommendationswill come forward that funding be reduced?

Senator Alston—I would be very surprised. Realistically, no, but obviously we have nottried to pre-empt what outcomes there might be. We have simply proceeded from a basis thatsome of those companies perhaps have uncertain futures. To the extent that that is a functionof unstable financial resources, then we would be looking to see how that situation can beremedied. The obvious thing to do is to throw money at the problem, so we may get somemore creative recommendations than simply that. But, if you ask me whether the overall resultis likely to be a reduction in overall funding, I would say that it is most unlikely.

Senator LUNDY—Glad to hear it.Senator Alston—I can also say to you that the Australia Council itself is seconding the

manager of the major organisations fund to the task force, so again there will be verysignificant input from the council.

Senator LUNDY—That will, I am sure, be very comforting news for the arts communitybut, given that the structure of this whole review is actually geared in the positive, how comethe overall council funding is less? My understanding is that the overall funding is less thanfor 1995-96, including factoring in CPI. So I go back to my earlier point that you have pared



back funding over the last couple of budgets and yet you are establishing this elaborate processjust to reinject some additional funds to be managed by the Australia Council with your stringsattached.

Senator Alston—But you cannot look at these things globally. Some programs expire, andnew ones are established, particularly in an election context where there are new initiatives.

Senator LUNDY—But surely the Australia Council has adequately managed to be able todeal with those types of comings and goings and the changing environment in the artscommunity. Why does it need you to have this political involvement in the funding levels?

Senator Alston—At the end of the day, the funding has to come from government. We,obviously, do not just give money away because someone asks for it. Even if they ask for it,you have to decide how much you will give them. Unavoidably, and maybe fortunately foryou and me, there is always going to be a role for someone to make the ultimate decision andprovide funds to the most appropriate bodies to administer those funds. The act does imposecertain obligations and limitations on government funding to the Australia Council and wewould not want to conflict with those. But beyond that, there is no limit to what you can doif the need is there and you think it is deserving.

Senator LUNDY—Given the cuts, is the council able to maintain in the next triennialround—but also with respect to the other grants programs—the same levels of funding aspreviously provided, or is there a reduced pool coming into this triennium?

Senator Alston—But you have to look at it in the context of the programs that are beingfunded.

Senator LUNDY—No, I am just asking an overall question, Minister.Senator Alston—Yes, but I am not sure that is terribly helpful. If they have fewer

responsibilities, for example, then you do not need the same level of funding. So you reallyneed to look at where the funds are applied.

Senator LUNDY—No, I think it is a valid question in that it gives an overall indicationof the position the Australia Council is in to maintain funding to arts organisations which havereceived funding from—

Senator Alston—As I think Hilary McPhee said famously a couple of years ago, the levelof demand will always dramatically exceed the level of supply.

Senator LUNDY—That is not my question.Senator Alston—And there are a lot of unhappy customers. So to ask, ‘Does the Australia

Council have the capacity to meet the demands on us?’ is really not a helpful question.Senator LUNDY—No, it was a question of maintaining levels of funding. So it is a straight

financial response that I am looking for.CHAIR —I think you have your answer, Senator.Senator LUNDY—No, I do not have an answer.Senator Alston—I do not know whether the chair wants to add to it.Ms Gardner—The base level of funding is still there. The additional government initiatives

over and above that will be the result of budget determinations over this year.Senator LUNDY—So coming up to this triennium round, there will not be an overall

reduction in the amount of funds allocated, regardless of who they are allocated to. Is that whatyou are saying?



Ms Gardner—Are you talking about the triennial period the council itself is in?Senator LUNDY—Yes, the council’s allocation of funds as compared to previous

allocations. Are you in a position to maintain the levels of funding generally? It is a questionrelating to your overall budget.

Ms Gardner—Yes. The overall budget, in terms of the base level of funding, remainsconstant notwithstanding the additional initiatives.

Senator Alston—I can just add to that. If you look at page 44, on the face of it you seea lower figure for an estimate in the out years. That is simply a reflection of the fact thatfunding for some projects expires and needs to be renewed. That lower figure does not reflectthe additional funding which has been committed.

Senator LUNDY—But that is my point.Senator Alston—So when you add back in amounts for regional arts, emerging artists and

major festivals, I think you will find that there is not much difference between the ongoingfigure and the current one.

Senator LUNDY—That is precisely my point, in that there is a reduction, but you hopeto backfill it with the additional funding which is going to have conditions attached and is notyet committed to.

Senator Alston—No.Senator LUNDY—You have just confirmed my point, Minister.Senator Alston—Additional funding for regional arts, emerging artists and major festivals

will have no more strings attached to them than they have ever had before. They are allsuccessful programs. They are all initiatives of ours. We think they have worked well and wehave renewed the funding. But the budget figures are put down at a time before the decisionto renew them is made and, therefore, it is not reflected in the out years. But, in a broad sense,it is business as usual.

Senator LUNDY—Okay, so there will not be any reduction over time, despite what it saysin the book.

Senator Alston—Sorry?Senator LUNDY—I am interpreting your statement as that there will not be overall

reductions over time, despite what appears in the book, because of what you have described.Senator Alston—As I say, those figures taken baldly give a very misleading impression

because you always have programs expiring. You take the snapshot for the budget at a timebefore they have been renewed, then you say, ‘Shock, horror, funding is down by $6 or $8million.’ But in fact those three programs that essentially make the difference are ones thatwe have always been enthusiastic about and we did not have any real hesitation aboutrenewing them. You often have funding time limited, even for the Keatings. The wholeCreative Nation exercise was a full year one, so there was a lot that fell off the cliff at theend of that period which, on the face of it, you would say would lead to dramatic reductions.

Senator LUNDY—Did you appoint Dr Nugent to the Australia Council?Senator Alston—Yes, we make all appointments to the Australia Council. We did.Senator LUNDY—But within your term of government?Senator Alston—Yes.Senator LUNDY—When was that?



Senator Alston—Two or three years ago, I think. She only became deputy chair when LexMarinos’s term expired, probably less than 12 months ago.

Senator LUNDY—What are the terms and conditions of her engagement as the independentconducting this review?

Senator Alston—She was appointed on 1 July 1997 for a three-year term. As far asremuneration goes for Dr Nugent and the other members of the task force, an application iscurrently before the Remuneration Tribunal.

Senator LUNDY—You mentioned that she had stood down from deputy chair. Is she stilla member of the council for this process of the conduct of the review or has she actuallyresigned from the council?

Senator Alston—I think she stood aside from the Australia Council.Senator LUNDY—What does that mean?Senator Alston—I think it means she has not formally resigned, but she has effectively

disassociated herself from the activities of the council.Senator LUNDY—So she just will not go to meetings.Senator Alston—She will not have any formal contact.Senator LUNDY—What is the standard remuneration for people conducting independent

reviews on behalf of government?Senator Alston—I do not know. I suppose there is one and that is all we would expect them

to get. I do not think they are seeking anything flash. It will just be the standard terms andconditions that apply to an inquiry of this nature. It is fairly short term.

Senator LUNDY—Do you envisage that Dr Nugent will resume her full position as deputychair of the Australia Council once this review has been concluded?

Senator Alston—Yes, I would.Senator LUNDY—I have some general questions with respect to the council’s views on

the GST. How concerned is the council about the impact of the GST?Ms Bott—The Australia Council has made a submission and has done some analysis of the

possible impact of the GST on the sector. We have some concerns about the impact.Senator LUNDY—Can you describe the nature of your major concerns?Ms Bott—Our analysis to date indicates that in fact there will be a positive benefit in terms

of cost reductions of about 1.9 per cent, but there will be a consumer price increase of around7.7 per cent which, in a price sensitive industry, is an issue. However, our analysis ofinternational comparisons indicates that this potential negative increase is a transition issueand that in the longer term there seems to be no negative impact. So our discussions withinthe industry and with government are on transitional arrangements at this point.

Senator LUNDY—Which sectors or bodies did the council expect will suffer the most,given your analysis?

Ms Bott—Those which do not pick up much of the cost reduction element but operate inhighly competitive consumer marketplaces and are very dependent on box office.

Senator LUNDY—Do you think the Olympics are going to affect the financial viabilityof some of the major companies funded by the council, in the context of sponsorship beingharder to come by and their ability to attract sponsorship in that fairly intense time leadingup to the Olympics?



Ms Bott—As I think my predecessor discussed with this committee the last time around,there is some negative impact anticipated in the area of private commercial sponsorship andcertainly that overall trend in the tightening of commercial sponsorship income for companiesis very much a part of the Major Organisations Fund review on which the inquiry is focusing,which the minister referred to before.

Senator LUNDY—With respect to that review, is it possible for you to provide thecommittee with a copy ofManaging the future?

Ms Bott—I think that was done last time but we can certainly do so again. From my readingof the Hansard, all members of the committee were given a copy of the draft report, but wecan certainly provide that again.

Senator LUNDY—Thank you, that would be useful, if it has not already been provided.With respect to the impact of the Olympics and the relationship that you just articulated withthe review and what happens next for the Australia Council, is the government making anyspecific additional funding commitments at this stage to minimise the effect of both the GSTand/or the Olympics on those companies?

Ms Bott—In terms of the latter issue, the Olympics question has not been quantified but,as I mentioned before, it is certainly part of an overall pressure on companies which are relianton corporate sponsorship, and that is most definitely one of the major issues identified in theMOF report and now being dealt with by the Nugent inquiry. In respect of the GST, we areobviously awaiting the outcome of that review and are engaged in ongoing discussions withthe minister on the potential impact.

Senator LUNDY—So the additional money arising out of that review is less about whatthe minister said about funding worthy bodies and more about compensating for loss in otherareas?

Ms Bott—I am not sure about the funding of worthy bodies. What the minister was sayingwas that the inquiry is dealing very much with a number of elements, primarily the MOFstudy, which analyses various economic pressures on the major organisations, and also picksup a number of other significant issues which are occurring in major organisations outside theMajor Organisations Fund—that is, ABC, orchestras and the opera companies. That is theoutcome of the inquiry, which is quite separate from other issues.

Senator LUNDY—Do you have terms of reference for the review to be conducted by DrNugent?

Senator Alston—Yes, we do. We can make that available.

Senator LUNDY—Thank you. Why didn’t you and Minister McGauran attend the thirdnational performing acts conference in Sydney earlier this year?

Senator Alston—Where was that?

Senator LUNDY—In Sydney.

Senator Alston—I am told it has something to do with the fact that we did not receiveinvitations.

Senator LUNDY—Thank you, Minister.

Senator Alston—I presume you were there. Were you there?

Senator LUNDY—It is not my portfolio. That is all I have on subprogram 1.4. I might takethe opportunity to place a few questions on notice.



CHAIR —Thank you, Senator Lundy. We will now deal with subprogram 2.4—AustralianFilm Finance Corporation.[10.21 a.m.]

Program 2—Film and intellectual propertySubprogram 2.4—Australian Film Finance Corporation

Senator LUNDY—What impact does the FFC envisage that the Film Licence InvestmentCompany Scheme will have on the FFC?

Ms Hughes—It is early days. It is a pilot. The intention, as I understand it, is that, over thetwo-year period, the FLIC will raise $40 million of concessional capital for the productionof Australian films and television programs.

Senator LUNDY—Could you give the committee a general overview of how Australianfilms are faring at the box office?

Ms Hughes—Yes, it is a topical question. The share of Australian films at the box officein the last calendar year was four per cent. That represents 17 films. That slate of 17 filmsis competing with approximately 280 American or imported films. An American studio picturethese days has an average budget of $US55 million, as reported inVariety. If you look at itin terms of value of the Australian slate, our slate in that year was worth approximately $53million. That slate is competing, if you like, with an industry valued at around $24 billion.I think, in perspective, four per cent is an appropriate and reasonable share of the box office.

That being said, that four per cent is a figure which does not have a hit. The question is:why wasn’t there a hit? Well, there wasn’t a hit. It is a little industry, the Australian filmindustry. I do not think we can expect a hit every year. Statistically, we have a hit everysecond year. It is like when we lose the Ashes—you know, ‘What is wrong with cricket?’ Inthe years we do not get a hit it is, ‘What is wrong with Australian films?’ When you put itall in perspective, frankly, we should not ever anticipate a share of the box office greater than10 per cent. Somewhere between three and 10 would seem to be average over the decade.

Senator LUNDY—Thank you, Ms Hughes. You spoke about $53 million competing with$24 billion in terms of locally produced. What percentage is $53 million of $24 billion?

Ms Hughes—It is less than one.Senator LUNDY—Less than one per cent?Mr M. Ward —It is 0.21 per cent.Ms Hughes—That 24 is a very loose figure.Senator LUNDY—Yes, I know, but the point is indicative that you are achieving four per

cent in the box office with 0.21 per cent of the budget.Ms Hughes—Yes.Senator LUNDY—I think the point is a sound one. Has the FFC acted to implement the

recommendations contained in the Gonski report?Ms Hughes—We have completed our first corporate plan and that has been submitted to

the minister for approval. I believe that we have got that. There were very few specificrecommendations from Gonski that affected the FFC. I think the principal one was that theFFC should retain its commercial brief, and I believe that we have actually fulfilled that. Mostof the recommendations, I believe, affected other organisations in the portfolio.

Senator LUNDY—I appreciate that. Those are all the questions I have for you, thank you.



[10.30 a.m.]

Program 3—Broadcasting, online and information technology

Subprogram 3.3—Australian Broadcasting Corporation

CHAIR —Welcome.

Senator MARK BISHOP—I might start with ABC Online. Minister, there have been anumber of press reports today on aspects of discussion concerning the future of ABC Online.Can you advise us of the government’s formal position concerning the future of ABC Online?

Senator Alston—We do not have a role in deciding its future. It is an initiative that theABC itself has developed. It has been highly successful. Mr Johns is quoted yesterday assaying that it has seven million hits a week so it is clearly in great demand. The issue reallyis the extent to which you can allow commercial involvement without compromising thecharter obligations and the standards that are set for the ABC generally? If you look at theBBC, as an example, one of the core promises they make, and they describe it as a core prom-ise, is that they will effectively maximise revenue from commercial activities. Again, youwould read into that ‘consistent with their charter obligations’. They have set themselves atarget for BBC Worldwide, which is their commercial arm, of quadrupling revenue fromcommercial activities over the next seven years until the royal charter expires.

All I would say is that the ABC owes it to itself not to simply have a knee-jerk responseor get caught up in the political crossfire about whether this amounts to privatisation, orwhether it amounts to further commercial encroachment, but to look at whether there are waysin which they can benefit from the synergies that derive from involvement with commercialoperators.

If you look at the whole business of technology around the world, you will find that peoplethat regarded themselves as competitors are constantly being involved in joint ventures,sometimes quite outside their traditional areas of activity because they see mutual benefit inunderstanding and getting new perspectives on the way in which business is done. It can leadto very significant cost efficiencies. It can lead to new programming ideas and to verysuccessful marketing operations.

In some ways, I think the ABC has suffered from not having the benefit of that sort ofmarketing expertise. If you take DCART, for example, they eventually tried to do it allthemselves, but they may well have done a lot better if they had entered into a joint venturewith those in the commercial sector who have that sort of experience. You can have all sortsof arrangements. You could retain all of the copyright royalties for yourself, but still have anoutside equity stakeholder. There is no end to the flexibility and the working arrangementsin a joint venture. All we say is that if this provides an opportunity for significant additionalfunding, without compromising the ABC’s role and charter, then it ought to be seriouslyexplored.

Senator MARK BISHOP—Would that significant additional funding primarily comethrough advertising revenues derived from access to Online?

Senator Alston—It does not have to. There are three traditional sources of revenue thesedays. One is subscription, the other is advertising and the third is sale of products. You canhave all or any of those. It does not have to compromise your integrity or your missionstatement. You simply control the way you go about it. You can have advertising that is onlyconfined to a particular area. You can have what is called ethical advertising.



Senator MARK BISHOP—But, in terms of ABC Online, the primary source of financewould come through access to advertising revenue and not product sales or subscription.

Senator Alston—Are you saying it does now?Senator MARK BISHOP—No, it would if we go down this further path.Senator Alston—Not necessarily; it might. I am saying that all three are ways in which you

can derive revenue. You ask yourself whether there is anything necessarily incompatible withthat level of commerciality and strict adherence to your charter obligations. I would havethought it was not beyond the wit of man or woman to devise ways in which you can protectwhat you set out to do. The ABC has commercial activities now and they are notcompromised. People do not walk into ABC bookshops and say, ‘This is a corrupt organisationthat is only interested in the dollar.’ They find it a very useful way of getting access to a rangeof products that might otherwise not be available.

Senator MARK BISHOP—Mr Johns, do you share that view?Mr Johns—The minister has put a fair range of views. Let us go to Online, where you

began. It is my view that the development of Online—the development of our digitalservices—is a matter for the board. But it would seem to me that, if the ABC is to have togo prospecting for funds, we would not be staking our first claim on selling off our Online.The BBC has been mentioned. Well, the BBC is pouring something like £19 million a yearinto its online services. I was there a few months ago and the Director-General was revellingin the success of its online services, as we are here, because we have done a terrific job withit.

You have to understand why it is that Online has been so successful. Before I move to that,there is a suggestion that we would be remiss if we were not trying to find funds for thedigitisation of the ABC—this enormously important era that we are in the midst of. The factis we have estimated it is going to cost us about $160 million to digitise. We have said thatwe will provide above half of those funds from our own resources. That is a terrific effort,I might say, given the fact that we have had these swingeing cuts. We are doing that by sellingoff property. We are doing that by actually marshalling our resources as prudently andefficiently as we can. So we are not shirking the task.

Senator MARK BISHOP—You are indeed embracing it.Mr Johns—We are, and we have been embracing the task earlier than most. The fact of

the matter is that Online is at the heart and core of the activities of the ABC and the way wehave been organising ourselves. Let us have a look at why it has been such a success.

Senator MARK BISHOP—Before you do that, can you tell us why it is at the ‘heart andcore’ of the ABC’s activities, as you have just described it?

Mr Johns—I will answer that by describing its success. What we have done is utilise, andwe are utilising, some 800 journalists throughout the country to provide material for Online.We are using our specialist program makers to provide material for Online. We are using ourradio networks to provide material for Online. We are doing that as an integrated activity. Itis part of our one ABC strategy because our one ABC strategy is to bring the full weight ofthe corporation—whether it be radio, television and/or Online—together. That is the way wecan maximise our results. We can capitalise on the talents, skills and money that the Australianpublic have invested in the ABC over the decades.

Now let me give you an indication of the success that mobilising that weight has given us.I took to the board, in my early months at the ABC, the suggestion—as a result of my



experience elsewhere—that we should develop multimedia services and that the board shouldprovide a $1 million budget. The board, burnt by previous experience in ventures that theminister has alluded to, gave me my first and only rebuff that I can recall in my time at theboard. It reduced that $1 million that I requested to $750,000. We built on that basis—that$750,000—an online service.

Contrary to what the BBC have done, from the rich funding that they provided, we haveprovided, from that meagre beginning, a service which, at the beginning of last year, had 3½million hits a month. Since the end of last year, it has 7 million hits a month. We areproviding a new service that is regionalised. It is all around Australia now because of our 800journalists and because of our 57 radio stations. We are mobilising them, not insulating them—not insulating the service, not dedicating it and putting it out there—but putting it right at theheart of our activities. We are using all those resources. So it is a terrific success.

Not only in itself, though, is it important. It is important for the way we are going to workfor the future. I have talked here at previous Senate estimates meetings and I have explainedwhat we are doing with the one ABC. We are working and reorganising ourselves inanticipation of digitisation. Just as we have mobilised all our forces for Online, we aremobilising our forces for the digitised future.

We are breaking down the traditional barriers between radio, television and online, for thatmatter, and we are saying that what we are about is providing content. We are multiskillingpeople so that they will provide content. The means of delivery will be secondary. We knowand the minister well knows in his responsibilities that, as a result of convergence—the comingtogether of the broadcasting, telecommunications, computing, printing and publishingindustries—the means of delivery are becoming secondary. Content is going to be king andwe are about creating quality Australian content.

I believe, far from selling off this and penalising us for this rich development that we havecreated, it is there to be capitalised—not only for the ABC, not only for broadcasting, but tohelp government meets its responsibilities in developing Australia as an information society.We will be at the cutting edge in multichannelling. We will be at the cutting edge in otheraspects and other developments of digitisation, just as we have been with Online. It is not apromise for the future. What we are doing now is a testament to what we can do.

Senator MARK BISHOP—So just to summarise that, Mr Johns, you see Online as anessential, integral part of the future of your organisation and not as some separate, worthwhilesubset.

Mr Johns—It is not a limb to be cut off. It is not a limb to be amputated. It is right at theheart of the ABC.

Senator MARK BISHOP—Let us presume the board chooses to go down that path. It hasdeveloped Online well. It certainly would have capital value in the private markets, if it wasflogged off. What are the necessary implications for that in terms of the future of the ABC?

Mr Johns—As I am saying, we would be looking at our strategy. We would be lookingat where we are going and addressing ourselves to the digital age. The board is very confidentand purposeful about the way we have been reorganising the ABC for the digital future. I amsure that the board will be just as deliberate in the future.

Senator LUNDY—Mr Johns, I appreciate your comments. I have followed the developmentof ABC Online since its inception. But the future holds a number of challenges, particularly



with respect to the directions of the government with both datacasting and digital television.Is the ABC in a position to adapt to those changes in a funded sense at this point in time?

Mr Johns—Provided that we do not have to jump too high, I think we are entitled to expectthat we will be funded for digitisation: just as governments in the past have funded the ABCfor its transition from radio to television, just as governments in the past have funded the ABCto go from black and white to colour. The ABC as a national asset is, I believe, well entitledto expect that we will be adequately funded. But that does not mean that we do not look foropportunities to help ourselves, whether it is with online services or whether it is with books,videos and extending the life of our content and our program. The minister has mentionedbusiness activities. You can engage some people—and I would never be one of these—whoconfuse doing things commercial with becoming commercialised.

Our enterprises: we have heard examples of what the BBC promises to do. Let me tell youwhat ABC Enterprises has done. Over the last five years it has doubled its gross income fromenterprises—from on-selling books, videos and so on. Not only have we doubled the grossbut the cash contribution through efficient management of enterprises has increased six times;we have increased it sixfold over the last five years. So the ABC is not an institution that isnot prepared to help itself commercially or creatively.

At the time that we have had this growth—whether it be in enterprises, whether it be, asI say, in facing digitalisation with online services—we have never had higher audiences fortelevision than we had last year. Our radio audiences have held. We have had critical acclaimvia AFI awards, via Walkley awards. So audiences have been very well satisfied with whatwe have been achieving under tremendously difficult pressures, financial pressures, and at thetime of this broadcasting change.

I am very confident that we will have the resources. We will have the managementresources, we will have the creative resources and I believe we will have the vision to seizethe opportunities that have been presented to us in broadcasting, along with the rest of thebroadcasting industry, over the coming years.

Senator LUNDY—Just on that point of content, you mentioned that content is king. Towhat degree is the ABC in a position to continue the creation of content, given that certainlyover the last few years the resources and funding available for the production of Australiandrama in particular has significantly been reduced?

Mr Johns—It is not easy, but look at what we have done in the recent past: Triple J, newsradio. Forty of our top 100 TV programs were locally produced. Look at what we are doingin the regions, the way that we are—

Senator LUNDY—That is not responding to my question. Perhaps you could answer it thisway: what proportion of content on ABC TV at the moment is produced by the ABC?

Mr Johns—Do you mean exclusively by the ABC or in co-production?

Senator LUNDY—Exclusively by the ABC and in co-production. If you could provide thosetwo figures.

Mr Lloyd-James—All its news and current affairs is produced in-house. Of the remainderof Australian production, 52 per cent is produced in-house and 48 per cent is produced as acombination of co-production, direct outsourcing or contestability which either sits outside orinside. What that represents as a whole is difficult to judge at any one point. I can get youthat precise percentage afterwards.



Senator LUNDY—Can you provide the committee with details of the complete breakdownof the proportion of Australian content within those categories that you have described?

Mr Lloyd-James—Sure. The intense difficulty is that, in reduced budget circumstances,your discretionary dollars with which to initiate a range of ideas whilst you maintainestablished programming to air are really where the tension arises.

Mr Johns—Senator, to go back to your question on how we would provide content fordigital programming, given our limited resources, first, as I have said, what we are going todo—and we have demonstrated this with Online—is that we will marshal all our resourcesacross radio, television and across the country. Second, we will look at our programs, the waywe can reuse them, repackage them, given that I hope that we are going to have good accessto multichannelling.

At the moment we have got one television network, as you well know. One of ourdifficulties is, as I keep saying around the country, that it is clogged because we have onlygot one outlet, whereas with radio we have got five networks. With multichannelling we willbe able to provide the services comparable, I hope, in the long run, as we are providing locallywith radio.

There are opportunities with recycling the programs. With digitalisation there is going tobe an ability to produce more low cost programs of a lesser production value. This horrifiessome people when you talk about that but all television production does not have to be at ahigh production value, it seems to me. We will have opportunities. Cameras, for example, were$80,000. When they are digitised they will come down to about $8,000 to $10,000. Thetechnical skills needed to use them, not the creative skills, will be reduced. This is what wewill be drawing on and this is why we are reorganising—so that the creative skills are notlocked up in radio or television, or for that matter Online.

Senator LUNDY—One more question in relation to what comes next. You have spokenabout your capacity to provide content for multichannelling. What about datacasting services?What position is the ABC currently in in regard to datacasting?

Mr Johns—This is a matter for government at the moment. We will want as good an accessto datacasting as we can have.

Senator LUNDY—I am more interested in the content side of the datacasting service.Perhaps you could take that on notice.

Mr Johns—Yes.Senator MARK BISHOP—The press reported the proposition to privatise or partially

privatise ABC Online. It was reported that Mr Kroger raised the matter at a recent boardmeeting. Is that correct?

Mr Johns—If you do not mind, I would prefer not to be in a position of canvassing whathas taken place at board meetings. I do believe that Mr Kroger has said outside the board thathe wanted that proposition looked at.

Senator MARK BISHOP—I do not understand why you will not confirm that Mr Krogerraised it at board level.

Mr Johns—I think he has confirmed that himself.Senator MARK BISHOP—Were you at the meeting when he raised it?Mr Johns—Yes.Senator MARK BISHOP—Was it an agenda item or general business?



Mr Johns—No, he raised it himself.

Senator MARK BISHOP—In general business?

Mr Johns—In the course of our deliberations. I cannot remember exactly at what point ofthe meeting it was raised.

Senator MARK BISHOP—What were you deliberating when he raised the issue?

Mr Johns—I do not remember the exact point.

Senator MARK BISHOP—You do not remember or you choose not to remember?

Mr Johns—No, I am not choosing not to remember; I am genuinely telling you that I donot remember at what precise point he raised it. As he himself has said, it was not an issuethat was discussed or canvassed then and there.

Senator MARK BISHOP—When will be it be discussed and canvassed?

Mr Johns—That will be determined by the chairman, who determines the agenda. Doubtless,we will be analysing and looking at what we are going to do with our digital and onlineservices. We will be looking at the whole range of possibilities. It is not to say that we willnot be looking for opportunities for the reuse of our online services. What I am saying is thatany future use of that has to be consistent with the idea that it is at the core of our activities.

Senator MARK BISHOP—Has the chairman raised it with you for future discussion ata board meeting, Mr Johns?

Mr Johns—Management is going to put forward a discussion paper on the generalproposition of how we are to develop our online services, and what issues are involved.

Senator MARK BISHOP—Does that exclude or include an option of privatisation?

Mr Johns—It would not exclude it.

Senator MARK BISHOP—When do you anticipate that discussion paper going to theboard?

Mr Johns—As I say, that is a matter for the chairman, but we will be working on the issuesas best we can.

Senator MARK BISHOP—Give us a time frame. Will it be three months, six months or12 months?

Mr Johns—I expect it to be well short of three months.

Senator MARK BISHOP—Around three months?

Mr Johns—No, I said I expect it to be shorter than that. I would imagine it will be adiscussion that will develop over the months. It is not going to be a once and for all. I wouldexpect that we will be addressing part of it at the next board meeting.

Senator SCHACHT—Mr Johns, this is not the first time Mr Kroger has made publiccomment or suggestions of what the ABC should do outside of the board. He made asuggestion last year that certain right-wing journalists should be employed because right-wingjournalists would add balance. I think he suggested Mr David Barnett should be employedbecause he was a conservative—not because he was a good journalist or a commentator.

Mr Kroger, as a board member, seems to be making public comment about what the ABCshould be doing but not doing it at the board first. Is this to be—

Senator Alston—It is quite inappropriate to ask Mr Johns to comment on—



Senator SCHACHT—I will ask you, Minister. Do you think it is appropriate that a boardmember should consistently raise issues in public that are clearly in the domain of boardmeetings? He is going out into the street and raising them before the board has reached a deci-sion. If all board members did that you would be complaining that the place was chaotic.

Senator Alston—You might be.Senator SCHACHT—No, you would be.Senator Alston—I thought you were a great democrat and you liked freedom of speech and

expression.Senator SCHACHT—Well, the practice of a board of directors is that they do have some—Senator Alston—Look, if there are commercial sensitivities attached to a proposition, if

you are in detailed negotiations, you obviously want to keep the matter under wraps. However,if you are simply exploring the concept, and in this area I would have thought these debateswould inevitably spill over into the public arena at some stage or other, it seems to me therecan be nothing wrong with any board member—whether it is Mr Kroger or anyone else—flagging a possible direction.

If I could simply add to what Mr Johns has been saying, I think it is not a matter for thegovernment; it is a matter for the ABC board. But the board itself does have an obligationto taxpayers to consider all possibilities. You are not helped greatly by talking about floggingoff or privatisation or—

Senator SCHACHT—Well, he did!Senator Alston—I am just saying you are much better addressing the merits of whether you

can protect your charter responsibilities—Senator MARK BISHOP—Shouldn’t you be telling Mr Kroger that, Minister?Senator Alston—An ABC—Senator MARK BISHOP—Minister, shouldn’t you be telling that to Mr Kroger, because

he is the one who is raising the issue of flogging it off and privatising it for $250 million.Senator Alston—As I understand it—Senator SCHACHT—He is saying that before the board has reached a conclusion.Senator Alston—I do not think he used either of those terms. He talked about allowing a

sale of up to 49 per cent. That is not flogging off, in my view.Senator SCHACHT—What is it?Senator Alston—I would have thought flogging off means getting rid of—Senator SCHACHT—It is a substantial sale of an asset.Senator Alston—No, it is selling off a portion. It is entering into a joint venture, if you like.

Flogging off normally means getting rid of an asset, and that is not what he was puttingforward. The issue really is that—

Senator SCHACHT—If he was not a member of the board, Minister, fine, but—Senator Alston—Would you listen! Would you just listen to the answer!Senator SCHACHT—He is a member of the board, surely—Senator Alston—It is simply another ABC delivery platform. It is not integral to the ABC.

What is integral to the ABC—Senator SCHACHT—Mr Johns said it is.



CHAIR —Senator Schacht, let the Minister have the right of his reply.

Senator Alston—What is integral to the ABC is its charter obligations and all theresponsibilities it has to disseminate information, educate, inform and entertain by a wholevariety of means. If that can be done with some degree of commercial involvement, I do notsee any reason why that should not occur. Similarly, if ABC bookshops are a very useful wayof disseminating information that derives from the ABC and you can better market that andderive a greater return rather than simply increasing sales, a greater profit figure—

Senator SCHACHT—Does Mr Packer want to buy ABC books now?

Senator Alston—by an outside marketing arrangement, then I think you have an obligationto explore that. There is no doubt that the ABC web site capitalises on a unique brand name.The ABC’s reputation and expertise and all that it stands for is clearly something that has agreat deal of intrinsic as well as probably commercial value. The issue is to what extent thatcan be protected even if you have commercial involvement.

It seems to me that you can properly explore those sorts of propositions. You could, forexample, do market testing to see whether people would be less inclined to visit an ABC website if there was some banner advertising on it. You can test to see whether somehow peoplewill be dissuaded. If they are not dissuaded then you are capitalising on your product and atthe same time generating income for yourselves.

All I am saying is, as Mr Johns has quite rightly said, that nothing ought to be ruled in orout at this stage. You ought to explore all the possibilities. If the ABC makes a decision thatit does not want to go down a particular path, then obviously it has to live with theconsequences of that decision and the logic of it. All I would like is that we do not have knee-jerk responses; that we look at how you can sensibly explore commercial opportunities withoutcompromising your charter values.

Senator SCHACHT—I was just raising the issue of whether it was appropriate for a boardmember to publicly canvass this sort of possible change to the ABC before the board had hadproper deliberation of the matter. Mr Johns said it was raised in a preliminary discussion; thatit was not on the official agenda—

Senator Alston—Are you saying board members should never canvass issues in public?

Senator SCHACHT—No; what I think is that until this—

Senator Alston—Is that what you are saying?

Senator SCHACHT—What I am suggesting is that Mr Kroger seems to have a propensityto run publicly with the issues before the board—

Senator Alston—Forget about the propensity. Do you argue that no board member shouldever canvass issues in public? Is that what you are saying? If you are not saying that, whatis the problem here?

Senator SCHACHT—All I can say is that most of the other board members of allpersuasions do not seem to be in the press on a regular basis like he is, pontificating aboutchanges to the ABC in ways which are able to create some controversy and may damage theABC. I just find it a strange process that Mr Kroger has.

Senator Alston—Maybe your factions operate in a different way. As far as we areconcerned, we do not have a problem with sensible public debate on propositions that reflectchanging technology.



Senator SCHACHT—You have no idea of ethics or fiduciary responsibility. A shabbylawyer you always were from the Prahran magistrates court.

Senator Alston—We are descending very rapidly—Senator MARK BISHOP—Minister, when did you first become aware that Mr Kroger was

going to raise the issue of partial privatisation of ABC Online?Senator Alston—They are your terms, not his.Senator MARK BISHOP—They are the terms that are reported in the press, selling 49 per

cent of the assets.Senator Alston—The press will always whip it up in those colourful—Senator MARK BISHOP—When did you become aware, however described?Senator Alston—When did I become aware he was going to say that? I think it was when

I saw a press release from Stephen Smith yesterday morning.Senator MARK BISHOP—It was not raised with you beforehand, privately?Senator Alston—I have discussions with Mr Kroger from time to time.Senator MARK BISHOP—I am sure you do!Senator SCHACHT—I am sure you do!Senator MARK BISHOP—He did not mention it in any of those discussions that he

thought it was something that should be raised with the board?Senator Alston—Something that should be raised with the board? I do not remember—Senator MARK BISHOP—The 49 per cent privatisation of ABC Online? Did he mention

that to you?Senator Alston—I am not going to canvass what discussions I might have with people. Why

should I?Senator MARK BISHOP—Do you deny that he raised it with you?Senator Alston—I am not saying anything other than that I do not think it is appropriate

to be canvassing discussions.Senator MARK BISHOP—Why not? You are the minister. You appointed him to the

board.Senator Alston—So?Senator MARK BISHOP—Why shouldn’t he properly raise it with you?Senator Alston—My job is to make sensible policy judgments.Senator MARK BISHOP—Did he raise it with you?Senator Alston—I am simply saying I am not canvassing any discussions I might have had

with Mr Kroger about the issue.Senator MARK BISHOP—No, but I am.Senator Alston—You are, but I am not responding.

Senator MARK BISHOP—I am.

Senator Alston—I know you are.

Senator MARK BISHOP—I am asking you: did he raise with you the issue of partialprivatisation of ABC Online before you read Mr Smith’s press release?



Senator Alston—I have given you my answer. I am not canvassing discussions I have hadwith Mr Kroger.

Senator MARK BISHOP—You are not denying it, are you?Senator SCHACHT—He is not denying it.Senator MARK BISHOP—You are not denying it.Senator Alston—I am not canvassing discussions I have had with Mr Kroger.Senator MARK BISHOP—Did anyone else raise it with you before it was raised at the

board level?Senator Alston—When was the board meeting?Mr Johns—Last Wednesday.Senator Alston—I have not been around for a few weeks.Senator MARK BISHOP—You have not been around, but was it raised with you when

you were around?Senator Alston—I am not going to get into what my memory might be about who might

have said what on a particular aspect of the ABC’s operations.Senator MARK BISHOP—What about some of your policy advisers; did they raise it with

you?Senator Alston—I do not know. If they did I am not going to tell you about it.Senator MARK BISHOP—Did your departmental people raise it with you?Senator Alston—I am not going to canvass any discussions I have had with the department

on policy issues.Senator MARK BISHOP—Mr Johns, did you send any advice to the minister’s department

on this issue prior to it being raised at the board level?Mr Johns—Not that I am aware of. One point I want to go back to is that I think there has

to be an understanding of what broadcasting is going to look like and what we are going tobe doing in the future. Broadcasting and the Internet services in the future will beindistinguishable. So, when I talk about it, and talk about providing the content for this, whenI talk about it at the heart and the core, I am looking to that future and looking to the waywe are positioning ourselves.

On the other hand, when you talk about enterprises, when you talk about books andconsumer products, they are distinguishable. What we have to do when we are providingcontent—I have a statutory responsibility and the board has a statutory responsibility, as theminister says—is act within the charter, and advertising at this moment is precluded from thecharter.

Senator LUNDY—Given that you, Minister, have made the point several times that in aconverging world what happens online, what happens digitally, forms the central tenet or thecentral point of a content distribution function of any organisation like the ABC, can I askyou specifically if you concur with that view expressed by Mr Johns that, as a result of digitalconvergence, in fact those distinguishing points between broadcasting—between IT&T, all ofwhich we canvassed in an earlier discussion—will actually lead to a bringing together of thosedifferent elements of broadcasting, telecommunications and the distribution of content?

Senator Alston—I think predictions in this area are fraught with difficulty. It is easy tomake straight-line predictions which come unstuck.



Senator LUNDY—Minister, I have heard several speeches that you have presented tovarious forums predicting the future, talking about convergence, and in fact several of yourpolicy statements articulate this direction in which we are heading.

Senator Alston—There is no doubt that convergence is a fact of life and that you areincreasingly getting crossovers between different technologies and different commercial sectorswhich have traditionally been quite separate, but you cannot then make the leap to the pointof saying essentially it is now all just one big blur and there is no distinction anymore betweenthese areas. There are still very significant distinctions. Twelve months ago—

Senator LUNDY—What are those distinctions?

Senator Alston—people would have said maybe the merging of PCs and television sets isjust a matter of time. I do not know whether it is or not. Web TV started off with a flourishin the US. It does not seem to have taken off as a smash hit. It may be a long time. I waspresent at a discussion recently where most of the industry heavy-hitters were debating whetherthe days of the PC were numbered. They basically thought it was going to be around foreverin one form or another. It would be a very brave person to predict that somehow you will endup with a converged set-top unit in the foreseeable future.

Senator LUNDY—I think that adds a lot of confusion to your view on convergence.Particularly I am asking you for a comment on Mr Johns’s statements about the centrality ofdigital content within the ABC, within a media broadcasting organisation. Do you concur withthose views or not?

Senator Alston—There is no doubt it is going to be a digital world.

Senator LUNDY—Do you concur with Mr Johns’s views?

Senator Alston—Which particular view?

Senator LUNDY—That digital content will become the central point or the point that shapesthe nature of broadcasting and media organisations of the future.

Senator Alston—Yes. I do not think there is any doubt that content is going to be generateddigitally, transmitted digitally, or that most platforms will rely on digital technology. I thinkthat is one of the givens in the new environment, but does that mean there will essentially beno difference between television and other platforms?

Senator LUNDY—The next question I have is this: do you agree specifically with MrJohns’s statement of the central importance of what the ABC is doing online to their futureas an organisation?

Senator Alston—Absolutely. They certainly have made the right decision in pursuing anonline operation. In fact, didn’t we give some extra funding for that a few years ago topromote that area?

Senator LUNDY—No, you didn’t.

Senator SCHACHT—You were cutting—

Senator Alston—Okay, I may be wrong—

Senator SCHACHT—Yes, for sure you are.

Senator Alston—But I thought that, in the lead-up to the 1996 election, we actually—

Mr Johns—There were some funds given for a science element online.

Mr Balding —I believe it came through the science budget appropriation.



Senator Alston—It might have come through it, but it was a general commitment to theonline unit of the ABC, wasn’t it?

Senator LUNDY—Minister, that is drawing a very, very long bow, I suspect.

Senator Alston—You can go back and look at our 1996 platform. My distinct recollectionis that we gave a financial commitment.

Senator SCHACHT—Is there no shame in you, Minister?

Senator Alston—We gave a financial commitment, as I recall it, to developing ABC Online.They made the running—I am not pretending they did not—and I have always welcomed thatand supported that. I think it is a tremendously important area of activity. That is not the endof the debate. The debate is not whether they ought to be in an online world or whether thereought to be an ABC web site or ABC portal; the debate is whether there should be any outsideinvolvement.

Senator SCHACHT—Can you take on notice how much you paid the ABC, what moneyyou did give the ABC?

Senator Alston—I will check that, certainly.

Senator SCHACHT—It would be interesting to see.

Senator LUNDY—Going back to the point that you just made about digital content,Minister, what do you see as the distinction between the ABC web site and the productionof digital content? You made a distinction in your response then, and I am interested as tohow you define it.

Senator Alston—I am not quite sure what you mean. All of what the ABC generates willbe done digitally, even in terms of radio, let alone television—digital cameras, post-productionfacilities, studios. Everything has a digital component these days as world transmission. Tothe extent that that results in content which is online on an ABC web site, that is digitallydriven, but there is probably more to a web site than simply the digital elements. Obviouslythere is a creative component in the web site design. All I am saying is that that can be acritically important brand for the ABC, but it does not mean that it has to be wholly ownedby the ABC to capitalise on it.

Senator LUNDY—You have acknowledged the central importance of digital content andyou have tried to explain how you see the web site in the scheme of things. From what youhave stated with respect to your views on convergence, you acknowledge Mr Johns’s pointthat the direction of what the ABC is doing online—then producing digital content in relationto that with the future of multichannelling, datacasting, their broadcasting services, their radioservice, et cetera—will guide the ABC’s direction in the general production of content. So anynotion to sell off 49 per cent or, indeed, to commercialise ABC Online reflects a fundamentalshift in direction and your attitude to the ABC and its status as a public entity in the Australianmedia environment. There can be no other conclusion based on what you have said here thismorning.

Senator Alston—I don’t want to repeat myself. I have said that you can retain the ABCidentity whilst at the same time having commercial involvement. If you say you can’t, well,you can say that.

Senator LUNDY—But we will no longer have what we have at the moment, which is apublicly owned provider of content, albeit at the moment broadcasting radio services andonline services converging into a—



Senator Alston—Why do you say that you cannot continue to generate content if you havea commercial component?

Senator LUNDY—You are proposing, or you are seemingly endorsing—Senator Alston—The production of or all sorts of buying in of commercial product does

not compromise the ABC or the quality of what is on the ABC.Senator LUNDY—If you want to explore this, Minister, could I ask you what your view

would be of a 49 per cent sell-off, as Mr Kroger has obviously canvassed with respect to ABCOnline, of ABC’s broadcasting services?

Senator Alston—No-one is suggesting that for a moment.Senator LUNDY—I know no-one is suggesting that. I am asking what your attitude will

be.Senator Alston—I would not be proposing it.Senator LUNDY—Would you support that?Senator Alston—No, I would not support it.Senator LUNDY—Would you support the notion put forward for 49 per cent sale of ABC

Online?Senator Alston—I have said that I think it deserves to be seriously examined and not

drowned in a sea of emotive language about flogging off and privatisations. It ought to belooked at in a new—

Senator LUNDY—So you are prepared to consider it for one part of the current ABCservices, but not other parts of the ABC services?

Senator Alston—Yes. As I have said to you, there is nothing intrinsic about a deliverymechanism. This is simply another way of transmitting programs and messages. If you cancontinue to do that and be consistent with your charter and have a commercial component thenit does not seem to me that you compromise your integrity.

Senator LUNDY—You have already acknowledged, with respect to convergence, that theseelements will come together. You are actually expressing a different attitude towardscommercialisation or partial sale of one element of delivering content from another. Thatapproach seems to be highly inconsistent. Whilst I am not for a minute advocating that youconsider it in other areas, I am putting forward the proposition to you that it seems highlyinconsistent that you are prepared to contemplate it with respect to some ABC services andnot others, perhaps for political reasons.

Senator Alston—Do you disagree with the bookshop as a commercial operation? Do youdisagree with ABC Enterprises?

Senator LUNDY—That is irrelevant to the questions I am putting to you.Senator Alston—I thought you were putting to me that once you—Senator LUNDY—I do not think it is appropriate that you try to sidetrack the issue.Senator Alston—I am not asking you to answer it. I am simply saying that, to the extent

that you allow some elements of the ABC to have a direct commercial involvement, whetherit is Australia TV—I seem to recall that the ABC was in a joint venture with Artist Servicesat one stage, wasn’t it?

Senator LUNDY—Perhaps I could ask you this: how important do you see the productionof online content for Australia’s general presence, general competitiveness and general



reputation in terms of input into public content in the future? What sort of political prioritydo you place on the development of quality online content in this country?

Senator Alston—I suppose we all aspire to have the best quality content but, as Mr Johnsrightly said, it might be heresy to talk about differential levels of production values, but atthe end of the day—

Senator LUNDY—No, that is not the question.Senator Alston—I am simply saying that you cannot say that all we believe in is the highest

quality production values across the spectrum. But you can say that, unless you have the rightcontent, you are unlikely to succeed. People are not going to watch it for the technology orfor the bells and whistles. They will be watching it for what they get out of it. That it seemsto me does not have to be generated entirely within the ABC. If the ABC controls what goesonto its web site then there is nothing to stop it having an outside input, in the same way thatwhat ends up on its screens that happens to have been produced entirely out of house throughindependent film makers or production houses does not compromise the ABC either.

Senator LUNDY—My final question is: are you comfortable with the notion that the ABCOnline presence carries advertising on behalf of commercial contributors?

Senator Alston—I have simply said I think it is something that the ABC ought to examine.Senator LUNDY—No, I am asking you what you think.Senator Alston—I am not going to jump to conclusions. I would rather see—Senator LUNDY—No. I am asking for your subjective opinion as minister.Senator SCHACHT—Everywhere else you jump to conclusions.Senator LUNDY—I think it is a reasonable question.Senator Alston—It must be a new year resolution.Senator LUNDY—It is a reasonable question, on the basis that at the moment—Senator Alston—I have said there are three sources of generating revenue. I would not put

all my eggs in the advertising basket. It might be quite inappropriate. You may find bigconsumer resistance to advertising but not at all to products in the same way that people buyproducts through ABC shops. I do not want to pre-empt a sensible analysis of what might bepossible. That is all I have been urging. I am not coming to conclusions on it. I am simplysaying that I think the ABC should look at all the possibilities. As I understand Mr Johns, thatis what they propose to do.

Senator LUNDY—Minister, are you prepared to rule out advertising on the ABC Online?Senator Alston—I am not ruling anything in or out. It is not even my job to do that. I am

simply urging that the ABC not rule out anything in advance and not simply cave into theLuddites who are not prepared to have open minds about the possibilities in the digital era.

Senator LUNDY—Thank you for not ruling that out, Minister. I am sure the Australianswho value quality non-commercial content will be very interested.

Senator MARK BISHOP—Mr Johns, can you advise us how much it costs to maintainthe ABC Online web site?

Mr Johns—I think it is about $1.6 million .

Senator MARK BISHOP—Per annum?Mr Johns—$2.6 million per annum.



Senator MARK BISHOP—Thank you. Who administers the ABC Online web site? Whois in charge of it?

Mr Lloyd-James—It comes in my portfolio. It is managed by the network director, ColinGriffith. It has a general manager of Online services, Colin Griffith. But he comes in myportfolio, directly to me.

Senator MARK BISHOP—How many people have access to it, that is, have an ability toedit it?

Mr Lloyd-James—To edit it?

Senator MARK BISHOP—Yes.

Mr Lloyd-James—It is produced by a variety of people both within Online services itselfand directly by program makers and people who are contributing to programs. They may becontributing to them in the form of ancillaries or they may be contributing directly. It is quitea large range of people.

Senator MARK BISHOP—So how many?

Mr Lloyd-James—I cannot actually tell you that. I can find out for you. It will be a roughfigure which varies project by project and element by element.

Senator MARK BISHOP—Can you take that on notice?

Mr Lloyd-James—Sure.

Mr Johns—I would like to add to that. We have got on the staffing for Online servicesoverall about 35 people. But what we have tried to do from day one is have Online goingacross the corporation, as I keep saying, so that it is not insulated. It is not a section. It drawsits material from the whole of the corporation.

Senator MARK BISHOP—Who has responsibility for the cool sites link page on the TripleJ page, Mr Lloyd-James?

Mr Lloyd-James—Essentially, the editorial responsibility sits with the network managerfor Triple J.

Senator MARK BISHOP—Who is that?

Mr Lloyd-James—He answers to me.

Senator MARK BISHOP—Who is that person?

Mr Lloyd-James—Ed Breslin.

Senator MARK BISHOP—Does that person monitor the content of the pages that they arelinking to for their appropriateness on a predominantly teenage web site?

Mr Lloyd-James—Yes, they do.

Senator MARK BISHOP—Can you explain to me how they do that?

Mr Lloyd-James—The ABC has got quite clear editorial policies on the rationale for linkingto given sites. There has to be an editorial reason. It has to be combined with either thenetwork’s activities or individual program activities. That is at first pass. Where those siteslink to next is something that our own network managers and specialist editors keep an eyeon. You have your first set of links which are directly out of the ABC. There is a second setof links from a lot of sites which take you out into a whole range of other sites. We keep aneye on those and, when we spot difficulties with any of those, we close off those links.



Senator MARK BISHOP—Do you try to keep away from salacious, offensive or quiteharmful material to younger people?

Mr Lloyd-James—Absolutely. The editorial policies are quite clear on it. As you know,the Internet is designed and devised about linking and searching common factors right throughthe Net. Editorially controlling general sets of links, once you get more than about two pointsaway, is very difficult. What we have to do at that point is make sure that we have sweepingexercises which keep an eye on what is in those sites. The reality is that, in over seven millionaccesses last year, the number of complaints about inappropriate sites, to my knowledge, wasabout two or three complaints out of that entire number.

Senator MARK BISHOP—I have had a couple of complaints. I will read out the quotesthat have been provided to me from ABC Online services in respect of nicotine and drugs.I ask you, as the senior person, to comment on their appropriateness. The first one says:Nicotine does seem to boost concentration, improve memory and control body weight!

Do you think that is an appropriate statement for the web site to be pushing to younger people?Mr Lloyd-James—I would not know. It would depend entirely on the context within which

it sat. If it is a single sentence extracted from—for the sake of example—the series calledWhat’s Your Poison—

Senator MARK BISHOP—From a series called?Mr Lloyd-James—I am assuming that it might be from a series calledWhat’s Your Poison,

which was about all forms of addictive drugs. What the series attempted to do—indeed, it waspraised for doing it—was to look at all forms of drugs, look at their positives, such as theyare expressed, and look at the harms and dangers that are in them. I think it is quiteconceivable that that sentence was there but I very much doubt whether that sentence was thereas the whole sentence in the program.

Senator MARK BISHOP—I will give you the whole context. This is from the web siteyou identified on 28 January of this year. It says:For many years, scientists have been channelling their research efforts into nicotine’s addictive qualities,the reason why we keep smoking, even though we know it’s bad for us. Their findings have beensurprising. Nicotine does seem to boost concentration, improve memory and control body weight!

Mr Lloyd-James—I will look into the context of the program and get back to you on it.I would be extremely surprised—in fact, astonished—if there was not a much broader contextwithin which that was said and which would have, undoubtedly, I suspect, led the audienceto look at heart, lung, vascular and possibly eye diseases as well associated with the use ofthat.

Senator MARK BISHOP—It was in the context of an extended four- or five-pagediscussion on smoking, its consequences, why people smoke, possible mental effects and ahistory of tobacco. I am trying to draw out from you whether you, as the senior person, regardsuch a comment as appropriate for 13- or 14-year-olds?

Mr Lloyd-James—Yes, I do.Senator MARK BISHOP—That nicotine boosts concentration, improves memory and

controls body weight? We spend hundreds of millions of dollars in the public health areadissuading people from being involved with smoking.

Mr Lloyd-James—If you set out to make a series of programs which look seriously ataddictive drugs—or, indeed, at any issue—in order to have credibility on those issues, I thinkyou have to canvass the various sides of the given issue. I would have no doubt, but I will



certainly come back to you, that the broad weight of that program would not have been thatnicotine is good for you.

Senator MARK BISHOP—But at this stage you think the comments that I have read toyou in that wider context are balanced and appropriate?

Mr Lloyd-James—I cannot tell you if they are balanced because I would want to read thewhole context. I would be extraordinarily surprised if they weren’t. Certainly, from an editorialperspective, I would expect our program makers to be looking—as they are supposed to do—impartially at those issues.

Senator MARK BISHOP—Can you do the same job for me in respect of this quote thatrefers to poisons, the ecstasy drug and like drugs. It states:Of all the poisons in this series, MDMA or ecstasy, generates the most hysteria. Like many illegal drugs,the popular press has done a very successful job confusing the public about its relative dangers.

. . . . . . . . .Today the drug, despite its reputation amongst users as promoting feelings of love and oneness, is thesubject of much heated, often ill-formed debate about its harmfulness. This is fuelled every so often whensomeone dies from allegedly taking ecstasy.

I would have thought that the press and, indeed, your own organisation have done quite auseful job in recent years about promoting the harm and likelihood of death when youngpeople avail themselves of ecstasy. For your own organisation to now be suggesting that thepress is a bit hypercritical or engaged in hysteria defeats that purpose. So could you also—

Mr Lloyd-James—Absolutely.Senator MARK BISHOP—look at that and advise us? It seems to me that those sorts of

statements are unnecessary, unwarranted and do harm to young people.Mr Lloyd-James—I was delighted to hear you say it: I think both Triple J and all of our

other networks—this is not actually a Triple J program—have been more than proactive incautioning the use of addictive drugs right across the spectrum.

Senator MARK BISHOP—They have been. But then they go and say that the popular presshas done a very successful job confusing the public about its relative dangers, to say:Today the drug, despite its reputation amongst users as promoting feelings of love and oneness—

and this is the important part—is the subject of much heated, often ill-informed debate about its harmfulness.

They just strike me as being, at best, inappropriate comments for young people to read, likeit is a big scare campaign that ecstasy is imported, manufactured illegally, sold illegally atafter-hours venues, and young people dehydrate and die. Why would you want to deny thatreality?

Mr Lloyd-James—I do not think it is a question of denying the reality. I would read thatsentence as saying that there has been a lot of confusion about what ecstasy is, watch thisprogram and you will get the clear truth on ecstasy. But I would really like to go back to thetranscripts and come back to you, as I will on the other issue.

Senator MARK BISHOP—Okay. You have the drift of my complaint.Senator SCHACHT—Mr Johns, are you aware that in the recent past a commentator

employed in South Australia from time to time on the ABC, Christopher Pearson, maderemarks about another ABC commentator that led the ABC a day later to apologise on air andpoint out that those remarks were not fair to the other commentator?



Mr Johns—I am not personally aware. Sue?

Ms Howard—I am sorry, neither am I.

Senator SCHACHT—As I understand it, Mr Pearson is an irregular commentator—he isnot in a regular slot but from time to time—and he made remarks about a regular commentator,Matt Abraham, who represents and writes for theAustraliannewspaper in South Australia.He has been a journalist in Adelaide—and in Canberra too, I think—for a long time and hedoes a regular piece. I understand Mr Abraham took exception to the remarks that were madeabout his reputation and the ABC obviously considered his complaint had foundation andapologised on air. Do you think it is odd—one commentator paid by the ABC and it gets tothe stage that you have to apologise to another? What are the guidelines? What is the concernof the ABC about this?

Senator PAYNE—It sounds like 2UE.

Senator SCHACHT—It is a variation of 2UE, I suppose. But as public money might beinvolved I am a bit more concerned.

Mr Lloyd-James—Can I just pick up the start of that. The ABC—

Senator SCHACHT—Is it true? I did not hear it myself. I was told about it from peoplein South Australia, as a senator from South Australia. I am just asking: do you haveconfirmation that such an incident took place?

Mr Lloyd-James—No, but we can come back to you on that. The only issue I would raisein your broader question is that we broadcast of the order of 200,000 hours a year with anenormous range of contributors, commentators, writers, performers. It is perhaps not entirelysurprising that occasionally they are going to bang into each other. But I will come back toyou on the issue.

Senator SCHACHT—Minister, there has been speculation in the Adelaide press, and I thinkeven in the national press, that Mr Pearson may be considered by the government forappointment to the board to replace Mr Bannon when his term runs out some time this year.Is Mr Pearson’s possible nomination under consideration by the government?

Senator Alston—We have not given any consideration to any particular replacements forMr Bannon. I think it is another five months before his term expires.

Senator SCHACHT—Do you think that someone who uses the ABC airways as a paidcommentator and ends up making comments that lead to an apology is a suitable person tobe on the ABC board?

Senator Alston—I do not think anyone here, including yourself, even knows what the issueis, so it is a fairly long bow to be asking me to comment on it. Beyond that, I am not goingto comment on who might or might not be an appropriate replacement for Mr Bannon.Obviously we want to look at every element of each candidate’s credentials.

Senator SCHACHT—Mr Johns, another issue I want to raise is a parochial South Australianissue. I discussed it with the manager of 5AN last week and she may have sent a memo upthrough the system; she may not have. Matt Abraham has had this regular spot, I think onceor twice a week, commenting on politics in South Australia and he has been doing it for acouple of years. It appears that that regular spot is going to be eliminated under the guise ofsome program change. Has the ABC received any complaint about Mr Abraham’s performancein job?

Mr Johns—Senator, I am not directly aware of this, but my colleague is.



Ms Howard—There has been no complaint about Mr Abraham and he has not lost hiscommentator spot. He is on twice a week on 5AN at 7.20, I think, in the morning, which isa very high rating time of day for us.

Senator SCHACHT—He has not lost it yet.

Ms Howard—No. We have just renewed a contract. There was a bit of a wrangle abouta contract and we have just renewed it, as I understand.

Senator SCHACHT—Ah, this might be good news at last. You are saying that the contractfor him to continue with a regular commentary—

Senator Alston—Maybe he had Ricky Nixon as his manager, you see, and he was holdingout for more.

Senator SCHACHT—Maybe he was holding him out! So the contract has been signed. Youdo these on a yearly basis, or something like that, do you?

Ms Howard—I do not know the nature of the contract. I just know that it has beenconcluded and he was on air this week in Adelaide.

Senator SCHACHT—I just want to confirm that he has signed a contract and the spot isgoing to continue.

Ms Howard—That is what I have been told, yes.

Senator SCHACHT—If it is not the case would you get back to me on notice?

Ms Howard—Sure.

Senator SCHACHT—I am very pleased to hear that and I think a lot of people in Adelaidewill be pleased that an independently minded commentator is continuing on the ABC in a townthat has a media monopoly in many other aspects. I think the ABC is fulfilling its role. Thatis very good. That is all I wanted to ask.

Senator MARK BISHOP—I want to raise some issues now concerning ABC GoldfieldsRadio, 91.1 FM, andBendigo Weekly.

CHAIR —Before we proceed, I have been advised by the two opposition senators that theyhave no questions for SBS, and I have a couple of questions for SBS which I might put onnotice, so SBS can probably leave.

Senator PAYNE—Nothing personal.

CHAIR —Nothing personal—that is right. Now back to the questions.

Senator MARK BISHOP—Who should I direct those questions to—Ms Howard or MrStevens?

Ms Howard—I have some very vague knowledge of this issue.

Senator MARK BISHOP—Can you briefly outline the circumstances of the issue withBendigo Weeklyand the other paper?

Ms Howard—No, I am sorry I cannot. I understand that there was some discussion betweenour radio news editor in Melbourne and theBendigo Weekly. The Bendigo Weekly, which Iunderstand is a newspaper put together by a group of real estate agents in Bendigo—

Senator MARK BISHOP—Yes.Bendigo Weeklyis a newspaper put together by this groupof real estate agents who had an arrangement with the local ABC FM station to source theirmaterial and publish it as news in the newspaper under a banner heading of the ABC.



Ms Howard—I do not believe it was in fact a formal arrangement, Senator, but we arehappy to take it on notice and find out the details for you.

Senator MARK BISHOP—Can you provide me with details on whether it was a formalarrangement and, if so, within guidelines and charter; if it was informal, who entered into thearrangements, on what basis the arrangements were made and what authority the person hadto enter into those negotiations and arrangements; and what, if any, consideration was involvedfor accessing the ABC information via the radio? Can you tell me who made the decision toprovide the material. Was any fee charged? Was there any express agreement or understandingthat the material must be provided under a very large ABC Goldfields Radio banner? Whatresources of the ABC were expended in compiling and delivering the material?

In relation to when the arrangement ended, can you advise the reasons the ABC had forwithdrawing their support toBendigo Weekly? If it was because it was an inappropriatearrangement, can you provide the committee with a copy of any written material relevant tothat withdrawal of the arrangement? Have you got all that, Ms Howard?

Ms Howard—Yes, absolutely. We can supply that.Senator MARK BISHOP—Can you advise me whether this sort of arrangement between

the ABC and a commercial outlet exists elsewhere in Australia?Ms Howard—I am not aware of it, Senator. We could take that on notice as well.Senator MARK BISHOP—Is it the sort of thing the ABC would encourage?Ms Howard—I cannot imagine that we would. I am not aware of the details of this. I would

like us to at least inquire ourselves about the relationship that you are talking about beforewe commit ourselves any further.

Senator MARK BISHOP—Okay. Then you can advise me whether it was something theABC would encourage or sanction. Mr Johns, off the top of your head, do you think it wouldbe inappropriate for the ABC to provide a news service free of charge to a commercialorganisation sponsoring a specific product in such a public way? It might be contrary to theintent and spirit of the ABC charter?

Mr Johns—We have very strict editorial guidelines on these things. I would have to knowthe circumstances and the detail, but we have very detailed guidelines that control these things.

Senator MARK BISHOP—All right. You will ask for a briefing on this?Mr Johns—Yes.Senator MARK BISHOP—Can you give me a response in writing?Mr Johns—Sure.Senator MARK BISHOP—Can we now turn to Gore Hill. Who is the appropriate person

to discuss Gore Hill—Mr Balding?Mr Balding —Yes.Senator MARK BISHOP—What are the financial implications for the ABC of the decision

to sell the site at Gore Hill?Mr Balding —In what regard—how do you mean?Senator MARK BISHOP—In terms of the cost of capital and the implications throughout

the organisation for funding the new site.Mr Balding —For funding of the new site in the city?



Senator MARK BISHOP—Yes.Mr Balding —The board has a policy that any funds derived from the sale of surplus

property are applied to digital technology, not to buildings. So any proceeds that are derivedfrom the sale of the Gore Hill site will be applied to our digital funding strategy.

Senator MARK BISHOP—How long have you had that policy?Mr Balding —I believe, and I will check this out, it was about December 1997. I am sorry,

Senator, I have been advised it was 1996.Senator MARK BISHOP—When you enter into the new financing arrangements for the

new production facilities, how do you intend to service the debt?Mr Balding —There will be two main sources on servicing that debt at the moment. The

first one is that we will apply some operational savings, in the vicinity of $2.1 million perannum. They are savings derived from moving off two sites and consolidating onto one site.Also, we are proposing to restructure our existing loan that is servicing the current Ultimobuilding and to apply about $8 million per annum from that loan restructure against the newdebt.

Senator MARK BISHOP—Would those two sources be totally adequate to fund the debt?Mr Balding —At this stage, the financial modelling indicates that the debt on the new

proposed building would be paid off in about 18 years. We are using 20 years as a payback,as a benchmark.

Senator MARK BISHOP—Is the sole reason for the decision to relocate to accommodatetransition to digital or are there other reasons?

Mr Balding —There are other reasons, operational as well as strategic.Senator MARK BISHOP—Which has more significance?Mr Johns—I do not think it is a matter of separating them. We have looked at the project

and we have had to convince ourselves that it is strategically sound. We believe it isstrategically sound because we are trying to break down the barriers between the variouselements of the organisation, whether it be radio or television, and to bring them together sothat we can maximise our skills. On operational grounds, we believe that we can do itsuccessfully and on financial grounds, too, as you have just heard. Those are the threebenchmark criteria that we have had to convince ourselves that we could meet.

Senator MARK BISHOP—That is fine, Mr Johns. Did the board consider any otheralternative to relocation—for example, an upgrade of the current existing facilities?

Mr Balding —The board considered a number of options back in March 1998. Frommemory, we took about four options to the board. One of those options was a majorreconfiguration on the Gore Hill site, so ultimately the ABC would be operating out of twomajor sites. The board considered that and did not choose that option. In actual fact, the boardapproved management to go away and do a more detailed analysis on the one-site option,which we have done. In doing that detailed analysis on the one-site option, management hasalso been looking at the financial and operational, as well as the strategic, implications if wewere to fall back to a two-site option. What went to the board included a financial analysison a two-site option, applied in exactly the same way—the financial criteria, the financialparameters—as the one-site option. The board was informed on that.

Senator MARK BISHOP—Will the additional debt burden place any pressure at all onABC expenditure on in-house production?



Mr Balding —I do not believe so. The financing strategy underpinning the proposal is thatit will have no impact on existing program budgets. In actual fact, the funds that we are usingto service current debt will not be increased. That has been made available by restructuringthe existing loan, applying operational savings coming out of moving from two sites to one,as well as looking at our forward property capital budgets.

Senator MARK BISHOP—So you say that the board has decided it will have no impactat all on in-house production.

Mr Balding —No impact at all on the existing output budgets.Senator MARK BISHOP—That begs the obvious question.Mr Balding —Sorry, the program—Senator MARK BISHOP—Forward in-house production?Mr Balding —No; again it is the same thing. The funds that we are applying to service the

debt come from areas other than what is available for programs at the moment.Senator MARK BISHOP—Will the debt burden place any impact on the timetable for the

initial phase of the digitisation strategy?Mr Balding —No, the funding of digital is a separate issue and has been addressed through

a separate strategy.Senator MARK BISHOP—So that is completely separate as well?Mr Balding —Correct.Senator MARK BISHOP—Given the assurance by Senator Alston in October last year that

the government would cover the cost of phase 1 of the digitisation strategy, do you expectthat the government will cover any part of the cost of this venture?

Mr Balding —We are not seeking any funds from government on this venture.Senator MARK BISHOP—You do not see it as a part of the cost incurred in phase 1?Mr Balding —There are two major elements to the project: the building costs about $110

million; the technical digital fit out costs about $17 million.Senator MARK BISHOP—Is that separate from the $110 million?Mr Balding —Yes, it is. The $17 million is being funded through the digital funding strategy

and is not part of the borrowings that would be required to fund the buildings.Senator MARK BISHOP—I understand that. If you had retained a position of the two sites,

the alternative position, you would still have to go through the digitisation exercise?Mr Balding —Correct.Senator MARK BISHOP—Would the costings for that be the same or different, if you had

gone down the other path?Mr Balding —I am advised that, under a two-site option, the cost of digital technology

would be in the order of $1 million to $2 million greater because of the two sites.Senator MARK BISHOP—Because of duplication?Mr Balding —Yes, and in our financial modelling we chose the conservative and used an

additional $1 million as a cost.

Senator MARK BISHOP—This is for you, Mr Johns, I think. It is a policy question. GivenSenator Alston’s comments on the government guarantees, do you have complete confidence



that the government will cover any outstanding debt occurred during phase 1 of the digitisationstrategy?

Mr Johns—Given discussions that the chairman and the board has had with the minister,no, I am confident.

Senator MARK BISHOP—Minister Alston sent a letter to Mr McDonald, the chairman,on 27 October. In the second paragraph, he said:The Government expects that any windfall gains which the ABC gets from property rationalisation orother relevant revenue sources must be used to repay the Phase 1 debt.

Does that have any application in this discussion?Mr Balding —No, I do not think so.Senator MARK BISHOP—No application at all, Mr Balding?Mr Balding —No. I interpreted that the windfall gains were basically driven by market

determination. In our forward funding strategy to the government, we estimated what we wouldexpect to receive from property sales, but obviously that is subject to market and the outcomesof that market.

Senator MARK BISHOP—Is Mr Balding’s interpretation of your letter correct, Minister?It is an interpretation. Is that what you meant when you wrote the letter?

Senator Alston—I think we are talking about looking at the end result of property salesand what proceeds are then available for what purposes. If you sell one property and you haveto use those proceeds to purchase another property, then that is just a straight transfer. Butif you find that you can do the same job for less, then you have made a windfall profit andwe would expect that profit to be then taken into account.

Senator MARK BISHOP—That is a different interpretation to yours, Mr Balding.Mr Balding —Maybe slightly different, but when we put our estimates to the government,

they were the net funds we expected to be realised from those sites. Remembering the board’spolicy is to apply all funds from property sale, less if there is any demolition or whatever, todigital technology, and we have included that in our forward estimates. But those forwardestimates were based on our market expectations at the time. If those markets realised a greatervalue, then I interpret that as the windfall gain. However, if those market expectations did notrealise what we expected, which forced the funding gap to be greater, I also expected thegovernment to cover that, provided the ABC adopted all reasonable measures to ensure itmaximised its funds from property rationalisation.

Senator MARK BISHOP—Do you concur with that, Minister?Senator Alston—I think, broadly speaking, that sounds plausible, yes.Senator MARK BISHOP—It sounds plausible, but do you agree with it?Senator Alston—You are having a hypothetical discussion here and obviously you need

to see what the actual outcome is. I think it is true to say that, quite clearly, if you got a lotmore than you expected from the sale, that is a classic windfall profit if you put in a budgeton a lower figure. Therefore, we do not expect any shortfall, but clearly we obviously haveto look at how that shortfall would be met, and consistent with our commitment for phase 1,then we would obviously be sympathetic.

Senator MARK BISHOP—Mr Johns, I presume the government has approved the board’sdecision and it is all now in place to relocate?

Mr Johns—There are various procedures that have got to be gone through.



Mr Balding —There is a number of them. First of all, we are in the process now ofpreparing a submission to the Joint Public Works Committee of parliament. We have go tothrough that hurdle first. What the board has approved is basically the concept in principle.

Senator MARK BISHOP—In principle?Mr Balding —Yes, subject to obtaining parliament’s approval, and we are in the process

of putting that submission together now.Senator MARK BISHOP—So it is necessary for it to be ticked off by the Joint Public

Works Committee, is it?Mr Balding —Yes, it is. The cost of that project is greater than $6 million which, I am told,

must be referred to that committee.Senator MARK BISHOP—What sort of time frame are you planning on there?Mr Balding —We are hoping to have that submission to the committee by June 1999.Senator MARK BISHOP—Okay. Mr Johns, staff representatives have raised with you

significant concerns over this whole issue and there has been a fair amount of correspondence.What response do you have to their concerns?

Mr Johns—We have taken them on board and we have done everything we can to meetthose concerns. For example, as a result of long consultation—something like 86 papers wereconsidered, a couple of hundred hours of discussion—together we have come up with anoperational plan that is much better than the one that we initially put to staff and the unionsin consultation. But I am not suggesting we have removed everyone’s concerns or all of theconcerns of everyone.

Senator MARK BISHOP—Have you gone about as far as you can go at this stage?Mr Johns—I believe so, yes.Senator MARK BISHOP—Can you give staff a guarantee that no other programs or

projects will be sacrificed in any way to cover this debt?Mr Johns—As Mr Balding has said, this project is supposited and pivots on—and has been

financially modelled and had outside endorsement and examination—the fact that we are goingto do it by maintaining existing output budgets.

Senator MARK BISHOP—That has answered that question. Finally on this issue, thetransition to digital TV commences in January 2001. Is there going to be a problem in termsof being a HDTV broadcast if you do not expect the new building to be completed before2002? Is that an issue?

Mr Johns—No.Mr Knowles—The planning for digital incorporates the provision of HDTV programming

from the outset, but it will not be HDTV production because, indeed, virtually none of thebroadcasters will be in a position to do HDTV production from the first day.

Senator MARK BISHOP—Why?Mr Knowles—Because the equipment is not available. So we are waiting till the

manufacturing industry actually makes the studio equipment for our environment, and that isprobably a couple of years out. We expect that as far as production is concerned we will notbe into any major production of HDTV until about 2003. That does not preclude some simplerproductions and also the fact that we will be able to buy in HD programming. Anything whichis produced on film has potential for going to HD.



Senator MARK BISHOP—Thank you, Mr Knowles. Turning to local content rules, thecommercial stations are required by legislation to comply with local content rules. Is the ABCalso so required?

Mr Johns—No, but we have targets.Mr Lloyd-James—We are not subject to those regulations.Senator MARK BISHOP—Why is that? What was the policy reason behind excluding the

ABC?Mr Lloyd-James—The ABC is not subject to ABA regulations at all, except in so far as

some of the complaints procedures are concerned.Senator MARK BISHOP—So what proportion of ABC content is Australian and what

proportion is from overseas?Mr Lloyd-James—Currently, approximately—I hope you will accept it as approximate,

because the figures clearly will shift slightly week by week—56 per cent or 57 per cent ofour output is Australian.

Senator MARK BISHOP—Fifty-six per cent Australian.Mr Lloyd-James—That is in television.Senator MARK BISHOP—And those proportions will not be affected by the increase in

ABC debt due to the sale of the Gore Hill site at all, will they?Mr Lloyd-James—No, I certainly would not expect that. What may affect them is simply

the kind of programming that is being made during the year, which is an internal matter forus. But that is really the only issue for us at the moment.

Senator MARK BISHOP—Thank you.CHAIR —It looks like we have concluded. Thank you very much for coming. We look

forward to seeing you again after the next budget.[12.01 p.m.]

Subprogram 3.5—Australian Broadcasting Authority

Senator MARK BISHOP—I have a question on the issue arising out of the licence areaplanning. Who is going to handle that?

Mr Tanner —I will lead off, with assistance, as appropriate, from the Director of Planningand Licensing, Ms Ritter.

Senator MARK BISHOP—Could you explain to the committee why the ABA has still notconcluded an area licence plan for the Gold Coast region?

Mr Tanner —As you may or may not be aware, the ABA had the job of doing licence areaplans for the whole country.

Senator MARK BISHOP—Yes.Mr Tanner —In recognition of the huge size of the task relative to our resources, one of

the first decisions we had to take was the decision as to priorities. Back in 1994, the ABAmade a priority decision which placed the Gold Coast, along with Brisbane and, in fact, allthe other mainland metropolitan areas, in the fourth out of five priority groups. The ABA—

Senator MARK BISHOP—What were the first three priority groups?Mr Tanner —The highest priority was given to radio and television services in the least

well-served areas of the country, which is about 50 per cent of the country, containing about



one million people. It is the remote and the outer regional areas. You should realise that, fortelevision, basically the country was divided in 1994 into two clear bins. There were thosewho had three commercial services and those who had only one. So we gave TV in the areaswith one a very high priority. We did radio, by and large, in those areas as well.

We gave second and third priority to the areas we considered to be relatively well served,but still not as well served as the metropolitan markets. Both areas two and three consistentirely of radio spectrum in the eastern states regional areas. Ms Ritter will have the details,but the status of that is that we have virtually completed that, in that we are soon to roll outthe final completed licence area plans. Most of that spectrum has been planned and the newlicences allocated. We have begun work on group 4. As you can see, the thinking was verymuch at the time that we would serve the areas where people had the poorest choice but, ofcourse, we have left till the end, by this thinking, the areas that have often the highest pent-updemand. I think that is particularly true of the big three conurbations, and the Gold Coast ispart of the Brisbane-Gold Coast conurbation from a spectrum planning point off view.

We were to have made much more substantial inroads into group 4 and the Gold Coast thanwe actually have, except that we had an extremely major new task given to us in the middleof last year by parliament which took the great bulk of our technical planning resources offline and that was, of course, the digital television conversion initiative.

What occurred basically from about May onwards is that the ABA cut back to a real nightwatch, if you like, with regard to the team of staff that were able to work on analog planningwhile it threw itself into the digital task. Late last year, however, we received a top-up in ourresources of half a million dollars for this financial year and we are seeking a continuationof that somewhat raised funding for the next couple of years. That has enabled the ABA tocome up with a schedule for completing at least two and possibly five draft licence area plansfor those group 4 metropolitan areas this year. I guess our priority—

Senator MARK BISHOP—Five plans for the group 4 area?

Mr Tanner —Remember there are only five areas in group 4. We are really talking aboutSydney and hinterland, Melbourne, Brisbane, Adelaide and Perth.

Senator MARK BISHOP—You will have 100 per cent of group 4 concluded?

Mr Tanner —Up to this year. That would be our aim, but, if we fall short of that, it wouldbe by failing to complete the lowest priority of those. We are talking about draft licence areaplans, not final. I should explain that one of the hallmarks of this process is wide publicconsultation. One of the ways we do that—we have certainly already commenced consultation;we did that last year in all of the metropolitan markets—is by putting out a draft licence areaplan which shows our thinking, identifies any options about which we still think we need somefurther information to choose between, and gives people who might be aggrieved by thedecision a good shot at it to tell us why we should make a different decision. So we are aimingto get out as many copies of this document as we can this year.

Senator MARK BISHOP—But the reasons for delay, if I can so describe it, essentiallycome down to the priorities determined by the government arising out of the digital TV billlast year. Is that a fair comment?

Mr Tanner —It is absolutely fair. The ABA did have some timetable problems back in1994-95 when it just did not understand the size of this job and the legal meaning of someparts of the law which set this up. But we had become pretty accurate at timetabling ourprocesses by last year. Before the digital job was given to us, we had expected—and we had



actually given signals to the community—that we would have draft licence area plans for allthe metropolitan areas out by December. We are still running a bit behind, but we are backand moving on some sort of schedule again.

Senator MARK BISHOP—I have received a tonne of correspondence from people in andaround the Gold Coast area and I understand that the ABA has, over the years, also receivedlots of correspondence. I understand, Minister, that you have also received a lot ofcorrespondence.

Senator Alston—I will take your word for it.

Senator MARK BISHOP—They write to me and say, ‘We have written to Minister Alston;we have written again and again and we have not had any response,’ so I presume they arebeing truthful in their copies that they send to me. So we will take it that you have receiveda lot of correspondence. With regard to some of that correspondence, Mr Tanner, do you knowthat the ABA informed holders of community broadcast licences in this area as long ago as1994 that the licence area plan was soon to be developed?

Mr Tanner —I am aware that in 1992-93, when the ABA was developing its priorities, therewas an expectation that all five priority groups would be done within three years of thepromulgation of the priorities decision. I think it is probably fair to say that that quite widelypromulgated undertaking has haunted the planning process since.

Senator MARK BISHOP—Haunted the planning process?

Mr Tanner —Yes. I use the word advisedly because I worked in the planning branch fora considerable part of that time as we developed the first licence area plans and came to anunderstanding of what part 3 of the Broadcasting Services Act in fact required us to do.

Senator MARK BISHOP—From the correspondence I have received, these people assertthat they were given undertakings—not a promise or an outline of future plans or future hopes,but undertakings. Can you comment on that?

Mr Tanner —It is difficult for me to comment on what might have been said to them orwhat they might have understood.

Senator MARK BISHOP—Do you have knowledge of that, because you have receivedthe correspondence as well?

Mr Tanner —No. The ABA basically has no choice but to proceed in priority order throughits planning process. There are a couple of things I should explain. Sometimes a particularperson, for whatever reason, may be badly aggrieved by the fact that planning is not goingto be finalised in their area for some time. For example, there are a number of aspirantcommunity groups that have been working at getting a licence for an extraordinarily long time.Probably a good example is Family Radio in Brisbane, which I think has been at it for overa decade, putting out tests when it can. These people are able to make a pretty strong case,if you like, that they ought to be marked out for special consideration.

The problem that the ABA has had during the planning process is that the only way it canissue a permanent community broadcasting licence is by completing a licence area plan whichshows that one is available. We can only complete a licence area plan if we have completedall the plans in lower priority areas. So, in effect, the ABA never had any power to make aspecial exception and say, ‘Right, we will now give you a permanent licence ahead of time.’That was actually out of bounds for us. That received extensive airing in a couple of the mostcontroversial instances. I think the most famous one would have to be Hits FM in Melbourne.



If ever there were a great wave of popular and political support for a group getting special,ahead-of-time treatment, that was it. The ABA literally had no legal room to turn.

One of the changes to the law we have seen in the last couple of years has been theintroduction of temporary community broadcasting licences. That, I suppose, is a palliativemeasure. It has not enabled the ABA to jump ahead and give permanent licences in specialcases, however special they may be. But it has enabled the ABA to put to work channels thatwe know are there already 365 days a year, to be shared out between all the aspirant groupsin areas.

Senator MARK BISHOP—I am going to come to that. That is a problem in itself.

Mr Tanner —Yes, I suspected that you would. That, if you like, is the measure which thegovernment has taken in the last two years in an attempt to address that problem that thepriorities and planning process is inflexible in that way—you cannot make a special case tothe ABA.

Senator MARK BISHOP—When do you intend to complete the area licence plan for thisregion?

Ms Ritter —We would hope, as Giles said, to have the draft done, if not by the end of thisyear, then early next year, to be followed by a final next year. I am a bit cagey about givingprecise timetables because, as Mr Tanner said, those sorts of timetables can come back tohaunt you sometimes when unexpected things disrupt the timetable.

Senator MARK BISHOP—And it is dependent on continued funding as well.

Ms Ritter —That is exactly right.

Senator MARK BISHOP—What is the time period between the draft recommendationsand finalisation?

Ms Ritter —It depends on the extent to which the draft is accepted or people agree with itor put up submissions disagreeing with it.

Senator MARK BISHOP—Give me a ballpark figure.

Mr Tanner —Six months to a year.

Senator MARK BISHOP—Can you briefly explain the current temporary licencearrangements?

Mr Tanner —The temporary community broadcasting licence scheme allows the ABA tomake available channels accessible to groups in areas for 365 days a year. That has been agreat boon for groups in areas such as Horsham, where there are one or two frequenciesavailable that we know about that are already planned, and we have only one aspirant group.

The way that it deals with the thornier problem where you have demand outstrippingsupply—known or likely—is that it requires the ABA to share the opportunity. It does thatin a way which at face value looks a bit odd but actually does make sense when you thinkit through. It does that by saying that the ABA must come out with arrangements to share thefrequencies but cannot have regard to the criteria that it will use when making a permanentallocation decision, which includes the extent to which each group meets the needs of thecommunity.

In essence, the ABA is enjoined not to pre-empt its final decision after it has finished alicence area plan when it actually will look at the quality of the group and compare the needsin the community for the different services the groups offer. The ABA is being told not to



look at those issues ahead of time and form preliminary views but just to share the channelsout in a way which is equitable.

Senator MARK BISHOP—I understand that process. Have you taken legal advice on thatpoint?

Mr Tanner —We have certainly taken internal legal advice and we believe the law isextremely clear on that point. In fact, that is precisely what the law says in so many words.The law actually says that the ABA is ‘not to have regard to’. It then runs through the keyand perfectly sensible criteria that we are required to have regard to in permanent allocations.They are, in essence, the respective needs in the community for different types of service andthe capability of the group, although, when it is put in legal terms, it is about four matters.That is the intention. It is really for the ABA not to be drawn into pre-empting the judge andjury position that it will be in later if it plans any permanent community licences.

Senator MARK BISHOP—In the temporary licence arrangements, you say strong internallegal advice says that you shall not have regard to the criteria that are laid down for permanentlicences. So tell me succinctly: what are the criteria that you have regard to in the issue ofthe temporary licences?

Mr Tanner —Basically, there is a channel availability criterion that we have regard to onthe one hand. We look at whether the spectrum is there, that is, that we are using frequenciesthat we are aware of and have been tested that can be used. We are not going ahead andplanning more and more frequencies on an interim basis pending licence area plannings. Webelieve that would be an unacceptable and, in policy terms, pointless diversion of resourcesaway from what the engineers should be doing, which is planning permanent services inlicence area plans. So there is a channel availability issue which we look at: are there channelsthere? We then look at whether the groups are bona fide. There is a basic hurdle. You havegot to be a fair dinkum group which is going to be eligible, in the end, for a communitybroadcasting licence, and there have been shonks over the years—not a large number that wehave caught out, but we have stopped people in their tracks.

Senator MARK BISHOP—That is the second criterion. Are there any others?

Ms Ritter —They just have to represent community interests and be a company incorporatedin Australia.

Senator MARK BISHOP—Does this kind of arrangement exist elsewhere in Australia?

Mr Tanner —Yes, this is an Australia-wide policy. I make the point, though, that the ABAhas finished licence area plans in so many areas now that, with regard to those regional andremote areas where there are aspirant groups, we are generally proceeding through thepermanent allocation. There will be winners, there will be losers and we will then be out oftheir hair. That has already happened.

Because we have stacked the most crowded markets until the end, we are now getting intothose extremely thorny areas where demand has outstripped any foreseeable supply outcome.Sydney and Melbourne filled up long ago. Adelaide, Brisbane and the Gold Coast—in fact,even Canberra—are now getting a problem in terms of the number of people who would likethese licences versus the number we are likely to hand out.

It should be remembered that during the licence area planning process we will be cateringto commercial narrowcasting and national demand for channels as well. This temporary policyis a special dispensation to the community sector to use channels ahead of time to basicallymarket their wares to the community and build up support. No other sector of broadcasting



gets it. But when we get to licence area planning, we will have to have regard to the needsof all sectors.

The simple fact is that in the Gold Coast the number of channels we have in use is three.We will do our utmost—we always do—to find channels to meet all demand, but I would notlike to bet that we will find more than three community services in the end. So the terrificsqueeze we are seeing in the Gold Coast now is a way in which the sheer shortage of spectrumis starting to warn aspirants: ‘There are going to be winners and losers here; maybe you shouldbe starting to think about what that means. You’ve got to be the best group. Maybe you canmerge. Maybe there are things that you should be reading from this.’ So it is a painful andcontroversial process. But that message about the number of groups now outstripping supplychannels is quite an important one for groups to be aware of, I think.

Senator MARK BISHOP—In that context, you would agree that the arrangements you haveare really quite an enormous imposition on management, sponsors and listeners of a particularstation, wouldn’t you?

Mr Tanner —I think it has been a perennial complaint of aspirant community groups, andI think one with a lot of justice in it, that it is very difficult. It is difficult in any case oftento run a community service. Some formats and some areas are just not going to make a lotof money. When you have the added problem that you cannot show some sponsors that thegovernment is going to leave you there indefinitely and that you have got a permanent licence,it is often argued to us, and I think with justice, that that does make it somewhat harder.

I suppose what I would say in response is that this is an opportunity that the governmentputs out. We are not about permanent allocation. We are making this opportunity availablefor people to test their wares, and that is part of the test. If groups want to show they can runa service and they can run it in those sorts of conditions, then that is going to be veryimportant evidence, when we come to permanent allocation, that they are a group that hasperhaps the need out there and certainly the capability to run a service.

One should never use the term ‘never had it so good’ but the fact is that, if you go back10 years, the deal was that you could get two lots of 14 days a year to test your wares. TheABA expanded that to 90 days in 1993 and the temporary community broadcasting licencepolicy has now enabled many groups to go all year round. Even in those areas which are verycrowded it does allow 90 to 150 to whatever. For example, on the Gold Coast there are threechannels and five groups, so we are looking at a substantial part of the year on air. Yes, thatis a far worse proposition in terms of keeping what is in some ways a small business runningthan a permanent licence from the government—particularly when I cannot guarantee that asixth group will not emerge, but—

Senator MARK BISHOP—But basically you would say—

Mr Tanner —it is the best deal that we can offer. I would argue that this is a generouspolicy. It says—

Senator MARK BISHOP—You say it is okay because the temporary licences for thecommunity groups can be characterised as temporary, an opportunity for them and anopportunity to build market share.

Mr Tanner —Obviously there are dangers in giving people something which you then maytake away. There are huge political dangers in that always. There is controversy. These groupsfind it easy to raise community and media support often. I would argue that that makes thisa generous policy. We have said, ‘This opportunity is here to test your wares’—much as we



have done with the sixth channel and television community—‘go out and make something ofit and show us why we should be planning community licences.’

Senator MARK BISHOP—How many letters of complaint would the ABA have receivedabout this matter?

Mr Tanner —Are we referring to the Radio Hope Island matter?

Senator MARK BISHOP—We are.

Mr Tanner —Do we take that on notice, Ms Ritter, or do you have an estimate?

Ms Ritter —I do not have a precise figure.

Senator MARK BISHOP—Do you have an estimate, Ms Ritter?

Ms Ritter —I would say probably no. In terms of phone calls, I have had all the callscoming through to me in recent times. There would not have been more than about half adozen, but I am aware that the licensing section would have had a lot more. We would haveto take it on notice to give you precise details.

Senator MARK BISHOP—I have copies of about 20 letters here so I know it wasexcessive.

Ms Ritter —I would say it would be about 20, but I could not say precisely how manysignatories to each one.

Senator MARK BISHOP—All right. Take that on notice. Have you received approachesfrom MPs?

Mr Tanner —I think yes. Certainly members have taken an interest in the issue and thatis quite common with community radio. It tends to build links with local government, federalmembers and the local media. In fact, we expect approaches from all three whenever we door do not do something which inconveniences a group.

Senator MARK BISHOP—Once a community group does their three or four months onair and then they go off the rotation and it goes to another community group, does the ABCcompensate them in any way for their commercial inconvenience of being taken off for fourto six months at a time?

Mr Tanner —No, on the contrary, it is very much about ‘Look, here is this opportunity;there are no promises, no guarantees. We will not guarantee you get this channel next time,which means do not go out and print a thousand bumper stickers saying 101.6 megahertz. Allthat is very inconvenient, but we are saying here is the opportunity, come and show us yourwares.’ Some seekers of community broadcasting have made extensive and effective use ofthat in building support for their services.

Other sectors do not use it. Radio for the Print Handicapped does not use it, Aboriginal andTorres Strait Islander Broadcasting tends not to use test licences, but some of the formats—notably Christian and general purpose community formats—have made extremely effectiveuse of those opportunities to get on air.

Senator MARK BISHOP—We are told that in the Gold Coast area there are three rockstations, a senior citizens orientated outfit, and a gay and lesbian outfit that have been grantedthe temporary licences? Is that correct?

Ms Ritter —I think it is two rock, one Christian, senior citizens, and the gay and lesbiangroup.



Senator MARK BISHOP—With each of the applicant groups, having satisfied those twosets of criteria you outlined, was the ABA required by the act to give them each a temporarylicence? It strikes me that one rock station might be characterised as pretty similar to anotherrock station.

Mr Tanner —That certainly has been argued. I guess music you do not like all sounds thesame. Certainly, there have been people who have not liked the other services. The key thingI would say is that the criteria we have regard to are very basic. We consider all those groupsto be bona fide from what evidence we have. If people have other evidence we will investigateit. We cannot get into judgments about merit, because we believe that is the clear meaningand intention of the law passed. We share out the opportunity.

I am a bit instinctively suspicious of characterisations like two rock stations. I suspect thattheir devotees are very different. But, if two services are basically covering very similarformats and a third one is very different, that is going to be a relevant matter when we cometo permanent allocation. It is going to be an important matter. Obviously, we are not goingto be keen to pack our airwaves permanently with services that are pretty similar in formatif we can cover a diversity of needs. It is not a matter that we believe we can take into accountduring this temporary phase.

We think the whole spirit of this temporary phase is: here are the channels, give it a try andsee what you can do. If there are two Christian groups, the fact is there is already a permanentChristian broadcaster in that Gold Coast area. If one got into the merit, we could always arguethat we should get rid of them right from the start. But that is not the path which the law hastaken us down. The principle in the law is: one round of merit based assessment when we haveplanned the community licences for all time. Let us not muddy the water beforehand by gettinginto playing favourites amongst people who might be contenders in the end.

Senator MARK BISHOP—I hesitate to ask this, but do listeners to the Christian station,for example, have different music, information and news tastes to those listeners who mightsubscribe to, say, the gay and lesbian radio station?

Ms Ritter —We do not have any research on that. I think the whole point of communitybroadcasting is that you have groups that appeal to different community interests and theytherefore gear up their programming to suit the people that they see to be their community.

Senator MARK BISHOP—That concludes my material on Radio Hope Island. I want toturn briefly now to the Fairfax-Packer business. When will the powers investigation beconcluded?

Mr Tanner —At this stage, barring further developments, I would expect it to be concludedthis month. The ABA has prepared a report. Section 180 of the Broadcasting Services Act saysthat where anything contained in the report might be contrary to the interests of a person youhave to give that person the opportunity to comment. In the spirit of that, the ABA put outthe report to people who might have argued that their interests are contravened in December.It received in late December quite a bit of comment and the ABA has been taking that onboard. Basically, the forensic part of the investigation—the extensive examination of people—occurred last year. At this stage we expect the report to be finalised this month and released.

Senator MARK BISHOP—Will it go to the minister or be made public?

Mr Tanner —I understood it would be a public report.

Senator MARK BISHOP—Tabled in the parliament?



Mr Tanner —No. We do not have a formal role there. We have a discretion as to whetherwe publish reports. That is different from our formal interim report requirements.

Senator MARK BISHOP—It will come out later on this month.Mr Tanner —Yes.Senator MARK BISHOP—Finally, when will you conclude your inquiry into the sale of

the Brierley shares?Mr Tanner —I am not sure I am able to comment on that. All I can really say is that the

ABA is currently investigating the effect.Senator MARK BISHOP—They are currently investigating?Mr Tanner —The sale of Brierley shares is none of our business, but the downstream

possible effects are, and the ABA is certainly conscious that there might be an issue ofcompliance with the trust and is basically working on that.

Senator MARK BISHOP—When you say ‘working on that’, have you made a formaldecision to conduct an inquiry? That was my advice.

Mr Tanner —The ABA is investigating at the moment—that is the best thing I could say.Senator MARK BISHOP—I am not trying to be pedantic here. What is the difference

between an inquiry and an investigation?Mr Tanner —Some statutory authorities have a substantive power procedure where there

is always a formal point when they move into an investigation. The ABA does not actuallyhave that so I am not absolutely certain that we have made a formal decision, but we havecertainly made a decision and are looking into it.

Senator MARK BISHOP—You are certainly looking into it.Mr Tanner —Yes.Senator MARK BISHOP—You cannot tell me the time frame before it is concluded?Mr Tanner —I am not able to comment on those issues because they are confidential.Senator MARK BISHOP—Why is that?Mr Tanner —They are confidential.Senator MARK BISHOP—I am sure the nature of your forensic investigations is

confidential.Mr Tanner —Yes. I think I am able to give you an indication of the time frame in which

we will be able to say something but I am actually happy to take that question on notice. Interms of commenting on the content of what we are doing—

Senator MARK BISHOP—No, I am not asking you to comment on—Mr Tanner —Could I take your question about the timing on notice because I do not have

a time frame on that?Senator MARK BISHOP—Yes, that is fine. That concludes my discussion with the ABA.

Thank you, ladies and gentlemen.CHAIR —That is a bonus. We will now close this committee. I am sorry; I spoke too soon.

Senator LUNDY—I know we have a few minutes left. I was perusing the annual reportand was wondering if you could provide an explanation as to the ABA’s involvement in thedatacasting definitions and inquiries matter.



Mr Tanner —We are involved in several ways in that. The key way, and the way you arereferring to, is the review which the Senate asked for and which was promised when thelegislation went through of whether we should be doing further definitional work on whatdatacasting is or is not and what should be permitted. That review is basically proceeding withthe department having issued its discussion paper late last year. The ABA has madesubmissions to that and will continue to assist the department in that process as best it can.If you like, the ABA, on that particular issue, is in the role of a humble submitter and a friendof the process. Obviously, as an arm of government, we are simply keen that there be goodpolicy outcomes. We point out things that might otherwise be missed in the process.

Obviously we have some other processes in train that might impact on the issue ofdatacasting. We are the agency which is going to be developing the digital channel plans fordigital. If the government wants to do any trials of datacasting the ABA, as the spectrummanager, would have a role in that. I think the review you are referring to is the departmentalone.

Senator LUNDY—Yes, indeed. Have you, in fact, made a formal submission to that review?

Mr Tanner —Yes, I believe that we have.

Senator LUNDY—Is that available publicly?

Mr Tanner —Have the solutions all been put on the department’s web site?

Ms Ritter —I think they are all on the web site.

Mr Tanner —We are not sure, but we understand the submissions might be all on thedepartment’s web site.

Senator LUNDY—Yes, that is certainly my understanding. Could you describe briefly forthe committee the ABA’s view on the definition of datacasting?

Mr Tanner —It may be better to have a look at our submission. I can certainly have a goat trying to summarise what was in it—the words are there—providing that is in the publicdomain.

Senator LUNDY—Even a brief description would be good because I note in several otherreports from government, for example, contained within the report copyright form and thedigital agenda, that there is a range of views relating to what constitutes broadcast as opposedto narrowcast, point to point and point to multipoint definitions. Could you give a rough ideaof where the ABA sits in terms of that range of views as to what constitutes datacasting forthe purposes of the act?

Mr Tanner —Bearing in mind that the ABA is like a friend of the court in theseproceedings—it is not a lobbyist—it is simply interested in good administration. The ABAstarting point in these submissions to the department—I am not sure we should go into greatdetail on this because there might be an element of egg sucking lessons about it—is to lookat what the current definition of broadcasting provides. If you recall, the digital conversionact defines datacasting in the negative—it is simply anything which is not broadcasting.

Broadcasting is defined in a particular way that the ABA believes catches any audiovisualor audio entertainment or information service which is transmitted point to multipoint andenjoyed in real time rather than on a browser basis whenever the viewer wants to see it. Thatis a view that is probably not free from legal doubt because the act was written in 1992 beforethese questions came up. But it is a view the ABA has taken in its online reports up till now.



For example, under that definition the ABA believes that some online services, and I amthinking here of real-time radio services where you can tune in and listen to KIX-FM orsomething as it comes out, are actually broadcasting; they come within the definition, whereasany service which may sound just the same but which is cached, or which is accessed not inreal time, is not going to be broadcasting.

That is the starting point, obviously. The ABA’s views and what the law means are of somerelevance to the starting point. The question really before the review is what should it be, andwhether that is adequate and whether it is going to be acceptable in policy terms if you haveservices that fall outside the definition of broadcasting perhaps simply because they areaccessed by a browser but might be in other ways to the viewer totally indistinguishable fromwhat you would enjoy on Channel 9 or Channel 2 in the evening. That is the policy question.

From memory, the ABA submission makes the point that any regulation of anything really,but certainly of content, ought to be the minimum to achieve the identified policy goal. Thepolicy goals that we were conscious of in going into this included a concern on the one handthat free-to-air broadcasters using their down time for datacasting should not steal a marchon, for example, the pay TV sector by using their free asset to put out broadcastingsubscription services. On the other hand, there is a concern that any datacasters that come intoany leftover spectrum—that is datacasters that are not free-to-air broadcasters—not, in letteror in spirit, contravene the three commercial stations to a market limit. I believe we suggestedthat those were the policy concerns underlying this and I think we expressed a view that wewould not like to see a lot of unnecessary forays into limiting the content of high bit rateonline services whether delivered through digital channels or through telecommunicationsbeyond what was necessary to achieve those policy goals.

It is a very small submission and you will find those things in it. The ABA is continuingto take an interest in it and it is certainly possible that, as the issues become clearer, the ABAmembers who have expressed interest and are continuing to meet and discuss this may haveother views they want to put in, including more substantive policy views. As you can see, theviews I have put to you are really as much about process as about content.

Senator LUNDY—On that basis, has the ABA taken the initiative to review or even analysethe range of submissions to the datacasting review that is taking place within the department?

Mr Tanner —We take an active interest in it and we will do so, but at present I cannot saythat any officer has been delegated to read the submissions. But that is going to occur. Themembers have asked for a paper on how that is going and we have earmarked an officer whowill be doing that review that you describe. At this stage we have not. We are operatingalongside the department at its speed. But it is certainly an issue that we have considerableinterest in. The definition of broadcasting is very germane to the definition of our role.Anything which gets close is getting into that part of the Broadcasting Services Act whichreally gives the ABA a role, or deprives it of a role, and is of great interest to us in a policysense.

Senator LUNDY—Yes, I can imagine. Are you familiar with the views expressed in theparticular document I spoke of,Copyright reform and the digital agenda?

Mr Tanner —No, I am not.Senator LUNDY—Just briefly. It proposes that a new transmission right be introduced into

the Copyright Act and a series of measures that are aimed at recognising convergingtechnologies for the sense of protecting intellectual property. I suppose this becomes almosthypothetical so I do not know if you will be able to answer it: are those legislative



developments with respect to convergence in other areas likely to impact directly on theadministration of the act or the act that you administer?

Mr Tanner —Remember that at present our role is clearly confined to broadcasting as itis defined. If you change that focus in some way to change the ABA, to widen the focus, thenyou get into those sorts of questions. But, otherwise, the ABA’s writ ends where broadcastingends. Some online services are broadcasting.

Senator LUNDY—What if the Copyright Act, for example, were changed to recognise anew transmission right as opposed to a broadcasting right to address converging technologies?How would the operation of that particular piece of legislation affect your role if thosedefinitions were reflected, say, in other legislations as well? I am just trying to get a feel foran overarching relationship between the legislation that guides your role and the legislationthat touches on all these areas of converging technologies. Or are you just sitting there andresponding directly to your act?

Mr Tanner —There is a policy level at which I do not think it is appropriate for me toanswer, which is about the implication of convergence for these discrete packets of regulationwe have always had, such as broadcasting regulation.

Senator LUNDY—Yes.

Mr Tanner —Yes, there are wonderful issues there. It is not my role to comment on those.Basically, the ABA is a creature of statute, and at bottom it is a licensing authority. As longas you have an action which is deemed to require a licence by law and that action is easy todefine, as is broadcasting, then the ABA’s role is clear. There is a policy question.

Senator LUNDY—Could I ask the minister a question, now that he is back? Minister if,in fact, the definitions of broadcasting and datacasting are changed and the new definitionsemerge from that process involving transmission, et cetera, do you envisage that that will resultin the appropriate amendments to acts, like the one Mr Tanner is speaking of, to address thatso there is a continuing regulatory mechanism for transmission as opposed to broadcast?

Senator Alston—I am sure that regulation will have to evolve to accommodate the changesin technology. We are in the process of introducing new digital copyright. Yes, clearly we willhave to ensure that we keep up. But you do not want to do it prematurely so obviously wewill do it after we have received all the reports that are currently being written on the subject.

Senator LUNDY—Are you familiar with theCopyright reform and the digital agenda?

Senator Alston—Copyright form?

Senator LUNDY—Copyright reform and the digital agenda. It is a publication.

Senator Alston—What particular aspect?

Senator LUNDY—The summary and the proposition the paper puts forward is that a newtransmission might be introduced into the Copyright Act to reflect converging technologies,and how intellectual property is protected across them.

Senator Alston—I am not quite sure precisely how we will respond, but the generalproposition is a valid one. Clearly, there will be copyright in the whole series of creativeendeavours that are digitally generated and therefore need to be protected in the usual way.

As we know, there is likely to be increasing difficulty in actually identifying who thecreative source is, but they are matters that the rest of the world is grappling with as well. Ithink we will ultimately be able to come up with something that essentially captures the



copyright entitlement in a digital world. We are going to have a cut at this in the not toodistant future.

Senator LUNDY—What does that mean?Senator Alston—It means that we will draft legislation.Senator LUNDY—Draft amendments to the Copyright Act?Senator Alston—Yes.CHAIR —Senators, we have reached 12.45 p.m., which is the scheduled lunch break.Senator LUNDY—May I have one more question to conclude this subprogram? Can you

describe for the committee’s benefit the timing and process of the datacasting review and thegovernment’s timetable for determining datacasting definition?

Mr Stevens—It might be better, if you want to get into those issues, to take that after lunchwhen the broadcasting policy group would have an expert here who is actually mastermindingall those reviews. It might be more helpful, I think, if we wait until then.

Senator LUNDY—Thank you very much, Mr Stevens; I will do that.Proceedings suspended from 12.46 p.m. to 1.50 p.m.

Program 4—CommunicationsSubprogram 4.3—Telstra Corporation Ltd

Senator Alston—Before we resume, I will hark back to a matter that was canvassed almostat the start of proceedings, and that was in relation to Mr Fletcher. I have had a discussionwith my staff over the lunch break, and they do not have my recollection that the matter wascanvassed with the department. It seems that the decision was one that was discussed internallyand that I made it on the basis of those discussions rather than of any departmental input.

Senator MARK BISHOP—I am trying to go back in my own mind to the discussion.Senator Alston—You asked me whether it had been canvassed with the department. I said

that I had discussed it with people in my office and that it had been canvassed with peoplein the department. I am told that is not right.

Senator MARK BISHOP—You did not have a discussion with the department at all?Senator Alston—The matter was not raised with the department, so I am told.Senator MARK BISHOP—Did the departmental people have a discussion about the issue

but that was not brought to your attention?Senator Alston—No, I assume not. They would not have known about it.Senator MARK BISHOP—You are telling me that the matter has not been raised or

discussed with the department at all?Senator Alston—Mr Fletcher brought it to my attention. I talked to people in my office.

I then gave him the clearance. I said that, as far as I was concerned, it was absolutely clearand he could go ahead; I wished him luck, and that was that. We did not consult beyond theoffice.

Senator MARK BISHOP—All right then. In that discussion you had with your people inyour office, I take it that you were satisfied that Mr Fletcher’s circumstances satisfied therelevant guidelines for staff?

Senator Alston—Yes. If there had been any suggestion that it might have compriseddecision making or advantaged Channel 9 then, of course, we would not have contemplated



it. Mr Fletcher was acutely conscious of that concern needing to be allayed before he wouldgo ahead. He acted with utmost propriety. We looked at the matter and said that it was notin his policy area. He has not been involved with them. This is simply what you wouldprobably expect from someone who had a longstanding interest and a high degree of successin the area of debating—finding himself actually having his services paid for.

Senator MARK BISHOP—And since that time the department has not brought anyconcerns to your attention?

Senator Alston—Not to my knowledge.Senator MARK BISHOP—Thank you, Minister. Mr Ward, you are the person to lead off

the questioning. Can you very briefly, for the sake of the record, outline the detail of the threechurning notices that have been issued to the Telstra Corporation?

Mr G. Ward —I can give you some top level points and, if necessary, I have someone herewho can go into further detail. Essentially the ACCC had, for some time during 1998, beenlooking at the operational and commercial aspects of the churn process managed by Telstra,in terms of customers churning to alternative carries and service providers. The ACCCexpressed concern with some of the aspects of the operations of that process, in terms of theoperations, the pricing, and other terms and conditions associated with the notices.

We modified our processes during 1998. However, the ACCC have still seen fit to believethat the way that process is operated and the terms and conditions remain anticompetitive. Wedo not obviously share that view. At this point in time, the matter is before the Federal Court.

Senator MARK BISHOP—Mr Ward, can you tell us what steps, if any, has Telstra takentowards implementing the terms of the ACCC notice of 9 December?

Mr G. Ward —I believe that all of the modifications and changes in commercialarrangements took place before that time, so we have made no further changes to our processessubsequent to 9 December 1998.

Senator MARK BISHOP—Okay.Mr G. Ward —I might just check that to see if I get any nods. I am getting vigorous

nodding.Senator MARK BISHOP—Is it Telstra’s current intention to comply with those notices

of 9 December?Mr G. Ward —It is our intent, as the ACCC have now taken it to the Federal Court, to

contest that matter in the Federal Court because, after modifying our processes and extensiveconsideration about how we might address the concerns, we do not believe that we have anyfurther case to answer. Clearly, this will be a matter that is heard out in the court.

Senator MARK BISHOP—Have the ACCC applied essentially to the Federal Court forenforcement orders?

Mr G. Ward —That is right, and penalties should they accrue.Senator MARK BISHOP—What are the potential penalties?Mr G. Ward —I think it is $10 million and then $1 million a day accruing over time.Senator MARK BISHOP—It is substantial.Mr G. Ward —The penalties are significant and, obviously, we have taken quite seriously

our consideration of adjusting our processes during 1998 and then our consideration since thenotices.



Senator MARK BISHOP—Are you contesting the application for enforcement by theACCC to the Federal Court on questions of fact or law or both?

Mr G. Ward —I would have to defer to my advisers here.Ms Weir—Essentially, Telstra’s view is that the conduct specified in the notices is not in

breach of the competition rule in the Trade Practices Act. What we are contesting is theACCC’s contention that we are breaching the law. We simply do not believe that is right. Itis a matter of interpretation of the Trade Practices Act. We say that the conduct that we areengaging in that is the subject of the notices is not in breach of the law.

Senator MARK BISHOP—Has that been set down for hearing as yet?Ms Weir—No. There is a preliminary hearing on 22 February, which is a first directions

hearing.Senator MARK BISHOP—Is it in the Melbourne registry or Sydney registry?Ms Weir—Sydney, I understand.Senator MARK BISHOP—What time frame has Telstra been advised of by its counsel

that this is likely to take?Ms Weir—That is somewhat uncertain at this point. Essentially, a range of preliminary

matters will need to be addressed in those preliminary hearings. We are looking at whetheror not there are steps that we can take to try and truncate a lot of those preliminary matters.

Senator MARK BISHOP—What are those preliminary matters?Ms Weir—There are issues of market definition, for example. That will be one prime issue

that in this sort of case often can take a very long time, particularly when there is a pretrialmatter such as discovery. If there is not agreement between the parties as to the definition ofthe markets involved, that can take quite a considerable period of time, because there will bea discovery process with perhaps the ACCC seeking discovery of Telstra’s documents to tryand prove its versions of markets as opposed to Telstra asserting its view of the markets. Ifthere is an ability to be able to agree on market definition that cuts out a considerable amountof time. But, at this stage, it is a little preliminary to be able to make a decision on some ofthose issues.

Senator MARK BISHOP—What other matters are an issue apart from market definition?Ms Weir—That is probably one of the major ones. The basic issue is the effect of Telstra’s

conduct specified in the notices on the market and whether or not it is actually having ananticompetitive effect. Telstra’s view is that that simply cannot be made out.

Senator MARK BISHOP—Has Telstra yet instructed counsel as to when it would be readyto go to trial, if the matter goes to trial?

Ms Weir—We will be ready to go to trial as soon as possible. But it is something of a two-way situation in terms of the commission being ready to take it forward and the court havingtime and so on. But there is a significant amount of preparation going on at the moment.

Senator MARK BISHOP—If the decision should go against Telstra, do you have the optionof appeal to the full Federal Court?

Ms Weir—Yes.Senator MARK BISHOP—And from that do you have appeal rights on matters of law

through the High Court?Ms Weir—Yes, presumably. But that is a long way down the track.



Senator MARK BISHOP—Would it be unfair to say that there is unlikely to be resolutionof this matter prior to the end of this year?

Ms Weir—I would say that it is unlikely if the matter goes to trial, depending on the court’stime and other matters. It would be fairly unlikely that a decision would be handed down priorto the end of the year.

Senator MARK BISHOP—So there will be a decision at first instance with a bit of lucktowards the end of the year, and then both Telstra and the ACCC have rights to further godown the appeal process, which is going to take a lot of time in both of those jurisdictions.

Ms Weir—And that is obviously consistent with the trade practices legislation generallyand general court processes. There are some really significant issues here in terms of theinterpretation of these parts of the Trade Practices Act. This is the first time that it has reallybeen tested. No doubt the ACCC and Telstra have significant interest in trying to work throughhow the legislation should be applied.

Senator MARK BISHOP—Does the ACCC, having lodged an appeal or seekingenforcement in the Federal Court, have the effect of a stay order on the three churn notices,so that they are not required to be implemented whilst they are going through enforcementand appeal proceedings?

Ms Weir—The notices come into effect on a certain date. As Mr Ward pointed out, Telstra’sview is that its conduct does not breach those notices, so it is now a matter for the court.

Senator MARK BISHOP—No, I mean the notices were to take effect from December 9.Telstra being of the view that it currently satisfies the law, and the ACCC having a differentview and having lodged enforcement proceedings, what is the operational status of theDecember 9 orders?

Ms Weir—They remain in effect as far as I understand. The question then becomes oneof whether or not the court finds that the conduct—

Senator MARK BISHOP—No, they remain in effect. Are they to be given effect to?Senator Alston—I think you are ultimately at risk if you lose and backdate to the date of

issue of the notice.Ms Weir—That is right.Senator MARK BISHOP—If you eventually lose, you are essentially accruing liability from

9 December.Mr G. Ward —Which is why it is a very considered decision by Telstra to contest this issue.Senator MARK BISHOP—What is the daily accrual liability?Mr G. Ward —I think it is $1 million maximum.Ms Weir—The maximum penalties payable are $10 million in relation to the notice and

$1 million per day. But they are maximum penalties.Senator MARK BISHOP—Yes. Let me rephrase the question because I meant something

else. What is the cost benefit to Telstra in retaining access to the revenue from notimplementing the churning decisions?

Mr G. Ward —Perhaps I could take the first part of this. One of the very strange piecesof this particular issue is that, whilst the ACCC have made it clear that they believe our currentprocesses—even as modified both in terms of operation and in terms of pricing—are anti-competitive, it is nowhere near clear to us as to what would be seen as acceptable. So it is



one of these strange cases where there is really no precision around exactly what would beacceptable. It is very difficult to answer that question on the costs and benefits of ourcomplying with something versus continuing with the current processes.

I might just make the additional point, which may be lost in all this, that competition is aliveand well. Churn is happening at very vigorous rates with 25 licensed carriers. Competitionis getting on with the business, I can assure you of that.

Senator MARK BISHOP—It does not surprise me that you say that, Mr Ward. But on oneside of the ledger sheet you have a potential liability of $10 million plus $1 million a day,and, if Ms Weir is right, that could be to a maximum of $365 million towards the end ofDecember of this year.

Mr G. Ward —If the maximum is applied, yes.

Senator MARK BISHOP—That is a huge amount, depending on, I suppose, the degreeof culpability and all of those sorts of things. Obviously your board has not chosen to takesuch risk lightly. On the other side of the ledger, you still remain a preferred supplier in themarketplace; you are not losing as much custom as you would have; your competitors do nothave access to the network. What I am trying to find out is what is the revenue savings to youin terms of cash flow of you maintaining your position.

Mr G. Ward —Senator, I can assure you that one of the points you made there about churnnot happening as much as it might be is something that we would contest, and certainly thathas not been factored into any cost benefit equation. What is the matter here is not, if you like,an economic decision of cost benefit; this is a matter of us complying with the law—anextremely serious matter. It is not a matter of saying, ‘Well, shall we flout the law to thebenefit of market economics from our point of view?’ This is a matter of our complying withthe Trade Practices Act, and that is the matter that the board is concerned about and that isthe matter that the board has been advised on in legal terms as to whether we are breachingthe law or not.

Senator MARK BISHOP—So you reject any suggestion that one of the factors your boardconsidered in authorising refusal to implement was a pure economic cost benefit analysis ofmaintaining the status quo?

Mr G. Ward —I will seek assurance from Deanne, but absolutely, and in fact I am sure ifwe went about that process of complying with the law of the land the management team andthe board would not last too long.

Senator MARK BISHOP—The issue been reported in the press and it has been put to mein correspondence that if there is a likely loss of up to $400 million on one side, it stands toreason that there must be a significant gain on the other side.

Mr G. Ward —Our position is to interpret the law of the land and comply with the law ofthe land as advised to by our legal counsel and their advisers, and that is what we have done.

Senator MARK BISHOP—All right. And can you tell me what sort of budget you haveallocated for this Federal Court action in terms of legal costs?

Ms Weir—I could not give you an exact answer, Senator.

Senator MARK BISHOP—Ballpark is adequate.

Ms Weir—Ballpark, probably for this financial year, perhaps around $800,000 to $1 millionas a high in ballpark. As I say, until we sort through issues as to how much discovery willthere be and so on, it is really difficult to know just how much those sorts of things will cost,



but I would anticipate probably for this, if we look at it on a calender year basis, we areprobably anticipating around $1 million.

Senator MARK BISHOP—Thank you, Ms Weir. I want to go now, Mr G. Ward, to theinterconnect issue. Has Telstra lodged a written response with the ACCC to the draft decisionon Telstra’s interconnect proposal?

Mr G. Ward —No, we have not yet. I do not know if you have seen the output of that draftdecision but it is voluminous—and there are many volumes of voluminous material. We areabsorbing that at the moment and deciding which way we will go in terms of our responseto the ACCC’s draft decision.

Senator MARK BISHOP—When do you think that response will be available?Mr G. Ward —At the moment, the ACCC’s deadline for comments and responses is 27

February.Senator MARK BISHOP—Are you giving consideration to challenging the ACCC’s ruling?Mr G. Ward —We have not had the final ruling yet. As I said at the time in the media, what

we want to do is decide on the facts of the ACCC analysis; what we can live with and whatwe cannot live with; go down, talk to them and give them a written response; talk to themand see if we can resolve a way forward. The matter of a final decision by the ACCC andwhat we do is not exercising our minds at the moment. We are on about trying to resolve theissue before it is a final decision.

Senator MARK BISHOP—All right. Again, the final decision comes down on 27 February?Mr G. Ward —Responses are due to the ACCC on 27 February. I am unsure whether the

ACCC have put out publicly a time by which they will make a final decision. I suspect theyhave not, and I would not if I were them, either. It will depend on the merit of our argumentsand the merit of others in the industry who no doubt will have views as well.

Senator MARK BISHOP—I understand that. Tell me, what does Telstra currently chargeits competitors per minute for connection to the network?

Mr G. Ward —These are individual bilateral confidential agreements.Senator MARK BISHOP—Right.Mr G. Ward —If there is some way we can meet the committee’s requirement, we would

need to do it in some other way.Senator MARK BISHOP—In private?Mr G. Ward —Yes, because these are not just matters for ourselves.Senator MARK BISHOP—It is a negotiation issue with individual carriers?Mr G. Ward —Correct, of which there are many successful agreements in place.Senator MARK BISHOP—Who is the No. 2? Optus, I presume.Mr G. Ward —No. 2 in what sense?Senator MARK BISHOP—Volume.Mr G. Ward —Volume of interconnect minutes would be Optus, yes.

Senator MARK BISHOP—And No. 3?

Mr G. Ward —Probably AAPT, I would say.Senator MARK BISHOP—So you have variable rates for the varying carriers?



Mr G. Ward —Yes. Those rates are within the envelope of our original undertaking whichwas filed with the ACCC in November 1997.

Senator MARK BISHOP—What was that undertaking?Mr G. Ward —That headline rate in that undertaking was 3.6c.Senator MARK BISHOP—It was 3.6c.Mr G. Ward —Yes. That is publicly in our undertaking.Senator MARK BISHOP—The rate charged to Optus, is that in the public domain?Mr G. Ward —No. That is a private matter. It is exactly the same category as I alluded to.Senator MARK BISHOP—Fair enough. If you have to eventually charge under the ACCC

determination as it is to date drafted, what sort of effect is this going to have on your annualrevenue?

Mr G. Ward —That is difficult to quantify, but there are a couple of things I can say. Firstof all, it will be with respect to the actual rates that are currently in the contracts we have withother carriers rather than any headline rate or any conceptual rate that may have come out indocumentation from the ACCC. That is point No. 1.

Point No. 2 is that it would depend very much on how the beneficiaries of a lower raterespond in that circumstance—does that benefit go to their bottom line, or does that inducethem to pass on even further rates of retail price with market share consequences? So, overall,it is fairly complex to assess.

Senator MARK BISHOP—But we are talking hundreds of millions of dollars.Mr G. Ward —I think that is fair to say, depending on the ultimate outcome with reference

to the charges that we currently apply, yes.Senator MARK BISHOP—That would obviously have been of concern to any carrier—a

loss of revenue of that magnitude. You would be giving consideration to plans to recoup thatlost revenue.

Mr G. Ward —I am not quite sure what you mean by that, in terms of recouping lostrevenue.

Senator MARK BISHOP—To get it back in other ways.Mr G. Ward —We also operate under a price cap regime, plus we are in a very competitive

marketplace. You are right; it is a significant issue. Could I just say that the significance ofit does go beyond the immediate impacts—or potentially the significance of it—of thisparticular decision. There are certain elements in the decision that may be applicable to othersuch matters which we would need to weigh up as well, such as the cost of capital which theACCC have applied to the allowable cost base. That is an issue that is of importance to usin other areas.

Senator MARK BISHOP—The cost of capital is a live topic in another discussion we arehaving. We will probably visit that on Monday.

Mr G. Ward —I look forward to it.Senator MARK BISHOP—Are you currently giving consideration, if you have to comply

with the ACCC determination, to raising line rentals?Mr G. Ward —There may have been some confusion about that in the light of the ACCC’s

draft ruling. Part of the reason that the ACCC came down with that draft decision, part of theirconsideration, was that under the price cap regime we had scope to put up business rentals



more than their current levels. That, to us, is a pretty theoretical adjustment but, nevertheless,they have made that input. I do not want to speculate publicly about what we might do toprices, only to say that we are in a very competitive marketplace and our pricing is withrespect to the market.

Senator MARK BISHOP—On the local calls issues, there was either a press release or aseries of press reports where the head of your carrier service division, Mr Campbell, put outwords to the effect that he did not expect to see an immediate impact following the issue ofthe draft declaration in respect of local calls. He said:It is certainly not going to be immediate, it will be some time off. Whether that will be six months or18 months or two years, I can’t say. There could even be some legal questions to be answered as towhether or not the decision of the ACCC is in fact a valid decision.

That was a direct quote from Mr Campbell. Are the comments of Mr Campbell the authorisedpolicy position of the corporation?

Mr G. Ward —Mr Campbell is a very senior officer in our company. He reports directlyto the chief executive. I am not quite sure exactly what he was commenting on in terms oftwo years. I suspect his comments were around one element, again of the draft decision thatcame out before Christmas on local interconnect services, where part of the commission’s draftruling was that it would be mandatory that a service of direct access to copper pairs by ourcompetitors would be a declared service.

Mr Campbell would know very well, given his history, that there is a raft of significantoperational and technical issues associated with the implementation of that decision, shouldit proceed as a final decision. We have seen instances overseas where industries are strugglingto conform and, in fact, have moved past that sort decision. I can only suspect he was talkingabout the raft of operational and technical issues. Of course, in any final ACCC decision, wewould need to look at that decision and the legality of it. I believe he probably would bereferring to the very considerable operational and technical difficulties, if that element of thedecision becomes a final outcome.

Senator MARK BISHOP—You are aware of Mr Campbell’s comments that if the draftdecision does become a final outcome it could take up to two years before the effect of lowerlocal call prices enters the market. Is that a legitimate comment that he has made?

Mr G. Ward —Let me be very clear here. I was referring, in what I said, to one elementof the decision. There are other elements of the decision that will affect local call pricing. Theaccess to copper is only one element of a fairly complex set of decisions by the commission.Market forces themselves plus other elements of that draft decision are likely to impact onlocal call prices well within two years.

Senator MARK BISHOP—Nonetheless, the bottom line remains that it still could take upto two years before those lower call prices, local and long distance, come into effect.

Mr G. Ward —I am not saying that at all. What I am saying is that one element of thecommission’s decision which could impact on local call pricing brings in quite an array ofchallenges of a technical and operational nature. There are other factors at work, includingthe regulatory decision and other market forces, that will impact on local prices well withintwo years.

Senator MARK BISHOP—Can I interpret what you are saying as that, notwithstandingthe operational and technical problems involved in the conversion, market forces may forcethe local call prices down anyway?



Mr G. Ward —That is the overwhelming experience of our industry globally. It is themarket that is driving competition and prices.

Senator MARK BISHOP—There appears to be, in respect of the churning and thecomments by Mr Campbell—notwithstanding your efforts to alleviate his comments—a patterndeveloping that we have this new regulatory regime, it has been in operation now headingtowards two years, the ACCC necessarily is taking time to get on its feet as are the industryand the carriers and there has been a series of major declarations, draft orders, decisions,whatever, but that every time we opened up the papers over December and January, the benefitof this new wonderful world of competition appeared still to be 18 months or two years away.Whether that is because Telstra is availing itself of legal avenues that it has, interpretingmatters of fact in draft determinations or for a range of other reasons, there seems to be apattern emerging that consumers and business are still going to be paying very high prices.It appears to me—and I put it to you—that that is part of a calculated decision by Telstra tomaintain its dominant position. What do you say to that?

Mr G. Ward —You have touched upon a really sensitive item with me. I thank you for that.It is just extraordinary how the media love to focus on the one, two or three regulatorydecisions that are impacting on the marketplace and totally ignore the many positive elementsthat are coming out of the competitive regime the government set up from July 1997.

This has got to be one of the most competitive telecommunications markets in the worldas set up by government policy. You will read, perhaps particularly more in the technical pressas opposed to the populist press, which likes to pick on the odd conflict as opposed to whatis actually going on, that there are a squillion new initiatives, new products and new pricingregimes in long distance, international long distance, mobiles and even local services. Thereare heaps of good news stories. Unfortunately, good news does not sell as well as conflict,particularly between, say, the ACCC and Telstra.

I think it is quite instructive to put down all of the positive things that perhaps do not getnews, versus the one, two or three issues of conflict with the regulator. I do not think that inJune and July 1997 anybody could have foreseen the amount of competition and the numberof carriers in this marketplace in the Australian domestic environment—25 license carriers,600 Internet service providers. This is an incredibly dynamic marketplace with heaps and heapsof good news stories that do not sell.

Senator MARK BISHOP—So do you reject the suggestion I made?

Mr G. Ward —That is exactly right. In fact, I would encourage everybody to look at thegood news stories in this industry. It is probably the envy of other regimes in some other partsof the world, in terms of real competition and benefits for consumers.

Senator MARK BISHOP—I am sure there are lots of good news stories that are out thereand not getting adequately reported. The bottom line is that nearly everyone in this room getsa bill every two months or every three months and the price for local calls has not altered.According to your Mr Campbell and other senior people, they are unlikely to alter inside twoyears.

Mr G. Ward —I have tried to give you a view of that in terms of what Mr Campbell said.In terms of local calls, we have one of the best regimes in the world for consumers. We havethe largest local call areas in the world. We have an untimed call. As call holding times,particularly for residential calls, are getting longer through the use of Internet and through amore social society or whatever, those calls are becoming significantly cheaper per minute



as we speak. We have done several studies. Maybe Mr Frueh would like to support mycomments on the benefits of local call prices to Australians.

Senator MARK BISHOP—The benefits of local call prices to Australians?

Mr G. Ward —To Australians.

Senator MARK BISHOP—Apart from the lower local call prices that we all hope are goingto come to pass?

Mr G. Ward —I believe effective local call prices are coming down in real terms perminutes.

Senator MARK BISHOP—In real terms per minute for local call prices?

Mr G. Ward —Per average conversation.

Mr Frueh —I could add to that.

Senator MARK BISHOP—Before you do that, Mr Frueh, how can that be when they areuntimed and there is virtually zero inflation?

Mr G. Ward —That is exactly right. You are getting the same benefit from a 10 minute callas you are for a five minute call.

Senator MARK BISHOP—And that has always been the case.

Mr G. Ward —That is why this is a lucky country.

Senator MARK BISHOP—So it is a lucky country, but not going to be a luckier countryfor two years?

Mr G. Ward —I do not believe that two year quote in respect of local call prices. I thinkMr Campbell was talking about a particular element of the ACCC decision.

Senator MARK BISHOP—Yes, I am prepared to accept that he is talking about one aspectof the ACCC decision. Whether he is talking about one aspect or 25 aspects, no-one isdisputing here that it is unlikely that the local call prices are going to come down in theimmediate future. That is our concern.

Mr G. Ward —Perhaps Mr Frueh can answer that.

Mr Frueh —I would like to add a couple of elements. We had some good tables and chartswhich we could show you at some stage if you are interested to have a look at comparisons.

Senator MARK BISHOP—I always like tables and charts.

Mr Frueh —Looking at local calls in isolation is not enough; you really need to look at theservices that are used by a customer. Typically access services combine with local services,given that Telstra has very low access rates compared to other comparisons. The actualaggregate—particularly for customers who do not call a great deal—provides a very affordableservice. It is amongst one of the lowest in the world, if you take that sort of regime. I havethe statistics here that we could show you.

Senator MARK BISHOP—I am sure the committee would be pleased to receive thatdocumentation in due course, Mr Frueh. I think the bottom line is that we are all simplepeople. Every two or three months when we get our phone bills and read them, we say toourselves, ‘Hell, still the same.’ But we read in the papers in December and January that theprices are going to be reduced by a half. I just put to you that that is an ongoing problem thatwe simple people want to see resolved.



Mr Frueh —As Mr Ward said, the press play the matter. You may come to that conclusion,but the fact is that—

Senator MARK BISHOP—The press are not misrepresenting those facts. They might notbe giving an interpretation that Telstra is comfortable with, but they are not misrepresentingthe facts.

Mr Frueh —But the matter that they are reporting on is not the retail rates for local calls.It is about the interconnect rates that the ACCC thinks appropriate. That is only one input intothe overall costing and pricing regime.

Mr G. Ward —One of the things that has characterised Australian telecommunications formany years is that a succession of governments of different persuasions have supported highlevels of telephone ownership in this country, that is, people being able to afford a telephoneservice. The basis of that has been sustainable in monopoly regimes and totally unsustainablein competitive regimes. The basis has been to subsidise local service—that is, the rentals youpay and the charges for local phone calls—to get them as cheap as possible to allow thefundamental tenet of policy to have as many people afford the telephone service as is possible,with long-distance calling originally being very much a luxury good. For people callingoverseas or calling very long distances in Australia the prices were set higher and above cost.The returns from both international and domestic long distance calls were subsidisingdeliberately set low local call prices and local rentals.

Over time, when you introduce competition, that regime becomes very difficult to sustain.You would have seen far more competition in the international and domestic long-distancebusiness in Australian telecommunications. In fact, it has happened the world over. So thereis more room for prices to fall in real terms in the long-distance markets of telecommunicationsthan there is for local call prices to fall because they have in many case been set not consistentwith underlying costs. They have been set at levels to encourage people to have a telephoneservice. Looking back over many years, I think that has been a good underlying objective. Wenow have something in the order of 96 per cent or higher of Australians having telephoneservice. That is 10 per cent higher than some areas in the UK and in the US. That is a goodobjective.

But in competition, which is probably addressing most actively the higher margin long-distance business, over time that becomes somewhat less sustainable. Certainly, there is lessroom for local service prices to fall compared to associated cost. That was recognised in theACCC’s report which you referred to earlier. They talked about an access deficit and otheraspects. That is very much aligned with the same point. So whilst I can understand somefrustration about why your local call prices are perhaps not falling as fast as long-distanceprices, mobile prices or other areas, can you take some assurance that this country has a veryhigh level of telephone ownership across the nation?

Senator MARK BISHOP—You have had your opportunity to put your response on thepublic record. I do not have any further questions, Chair, on these issues we have beendiscussing. I have a couple of questions on the Katherine advertising and the 000 business.But my colleagues might want to pursue these issues that I have finished on for a while.

Senator CALVERT—Chairman, I have one matter only I wish to raise.

Senator COONEY—I have one issue which I could probably let you read.

Senator CALVERT—Mr Ward, I will not be asking you about personnel today—you willbe pleased to note after five years.



Mr G. Ward —Thank you, Senator.

Senator CALVERT—The matter I wish to raise is one Senator Bishop was also talkingabout. That is the rationale behind Telstra’s decision to replace the current system of regionalbased 000 services with two services for the whole of Australia. What is the rationale behindthat?

Mr G. Ward —I will ask my colleague Andrew Day to come to the table, but let meintroduce him by saying that our objective, in any structural changes to delivering that service,are first and foremost to improve the service in performance terms. The provision of 000services is an extremely important part of our business. It is part of our licence conditions.The primary driver is to improve the service. I will ask Mr Day to make some comments.

Mr Day —It is important to understand that Telstra provides one aspect of the 000 service,which is the link between a customer and the emergency services operation. That is animportant context. We handle about 12 million 000 calls a year. Our intention every time isto make sure that we answer those calls as quickly and reliably as possible, and to put themthrough to the emergency services organisation. We have recently announced that we wishto nationalise and put the 000 handling into two areas as part of making sure that we canactually provide a more efficient and effective service for all Australians. It is important tounderstand that, when emergencies occur, there are a lot of calls that can happen in a particulararea or in different areas around Australia. The situation is set up to enable calls to betransferred from one particular centre to another centre, and to make sure that all 000 callsare actually handled. There are a variety of other reasons why we believe we will provide asafer and more effective service through centralising it but perhaps you would like to raisesome specific issues.

Senator CALVERT—I think you have probably realised why I am asking these questions.Initially, I thought your reason for centralising the services may have been financial but thenI found out that, in Tasmania’s case anyway, it only involved perhaps a saving of half aposition or of one position. So that could not have been the rationale behind it. It is obviouslyfor efficiency. As you would be aware, there are quite a few instances where 000 calls thathave been received have been incorrectly processed by operators, with the result thatemergency services have been dispatched to the wrong particular place in the wrong state.Would you like to comment on that? How is going national going to improve that particularproblem when that is exactly what caused the perceived problems in Tasmania? We had a casewhere an ambulance was dispatched to a particular address, but it was in the wrong state.There were claims made that the person died because it was not correctly directed.

Mr Day —Let me address the point you made about whether this actually improves theservice. There are two components, in particular, associated with this plan. One is that whenyou centralise, or you have the operation run out of a smaller number of areas, you canactually manage the processes that are used—the human process, because it is very much ahuman process—in connecting a 000 call, and make sure that every call that is taken ishandled in the proper way by those operators.

The other very important part of the program that Telstra has announced, though, is theinvestment of some $3.5 million in providing a mobile locality information capability. As youare probably aware, Senator, the issues that arise invariably relate to calls from mobile phones.We are unable to determine today where exactly someone is calling from when they use amobile phone, whereas if somebody rings 000 from my particular home, or anybody’s home



in Australia, the actual location comes up on the 000 monitor and is then transferred, real-time,through to the emergency service organisation.

The investment that we are talking about is really to take us through several phases of beingable to provide mobile locality information to stop the very things that do cause concern atthe moment. As I understand it, the first of these—where we will be able to identify the stateof origin of the person who is making the call on their mobile—is to be introduced aroundthe April time frame. In time, we expect, through different phases and cooperation with othercarriers, to extend through to being able to locate the actual area from which the person isringing—first of all, the exchange area, which is smaller than a state but still quite large, andin time through to a base station type area.

Senator CALVERT—So the mobile location indication will be off and running by aboutApril?

Mr Day —There are different levels of location identification. As I said, the first is to dowith the state level which is, I guess, the easiest to achieve technically. We can bring thatonline around the April time frame. That will address some of the issues that occur at differentpoints in time when people are unable to indicate exactly where they are ringing from.

I should say that the issues that you have raised regarding Tasmania have nothing to do withthe actual program that we have talked about as far as centralising goes. For some while, evenwhen we had quite a distributed 000 capability, we always wanted to make sure that, if threeor four operators in one place were busy, the calls would immediately go to another centre.So we always have an approach which says 000 never rings out. If it is not answered in acertain time by one centre, if all those operators are busy, it goes straight across to anothercentre.

So this situation has been with us for some period of time and is not associated with theparticular change in the number of centres. It is also the specific reason why we are nowaddressing the first phase of this mobile locality information guide. It will make the serviceessentially much safer for Australians.

Senator CALVERT—That reason was given but, for the life of me, I cannot understandwhy Telstra would want to move the locally based 000 numbers. Why didn’t they wait untilApril until the mobile location indication was on? Why wouldn’t you have waited until thatwas in place before you started making changes?

Mr Day —As I understand it, the changes are only going to be made after that particularpoint in time.

Senator CALVERT—So you are saying that the problems that arose in Tasmania were asa result of being an overload on the system and that they were transferred through to anotherstate?

Mr Day —I am not exactly aware of the specific instances that occurred at that particulartime in Tasmania, but it is quite common for a call to be taken in another state. At themoment, as I understand it, 000 is handled out of the eight centres that have been there forsome while. We are, of course, keen to put in the mobile location identification before webring it down to two particular centres.

Mr G. Ward —I do not know whether Andrew mentioned that we have agreed to look atthe specific circumstances of the Tasmanian issue. I think we put out a release last week thatwe have engaged an industry consultant to look at the specifics of the Tasmanian issue. Thatreview will take place over the next six to eight weeks to see if there is anything in the



Tasmanian circumstances that we should take into account before implementing that decision.I am not quite sure if that came out; I was talking to Senator Cooney.

Mr Day —No, because I did not want to confuse the issue raised by Senator Calvertregarding this particular incident, which had nothing to do with this proposal.

Mr G. Ward —That is right.Mr Day —The Tasmanian government has voiced some concern about our proposal.Senator CALVERT—And I think Senator Harradine has, and I have and others have. The

thing is, from the Tasmanian point of view, I suppose, and it could be said for any state, thatthe local people like talking to people in their own area who they think may have a betterknowledge of local geography than someone, say, in Sydney or Melbourne. Having said that,Telstra has made a decision.

Mr Day —I should make it quite clear that, as Mr Ward said, we have listened to theconcerns and we have just announced—I believe it was last week—that we will have anexternal industry expert look at the concerns raised. They will also look at a proposal fromthe Tasmanian government, and investigate whether 000 calls should be answered in Tasmaniawithin the context of an effective national 000 service. We have made it quite clear that wewant somebody externally to look at this, to look at the concerns raised, to look at the proposaland obviously take that into consideration in our plans. To that extent, we have not finalisedthose plans.

Senator CALVERT—I am pleased to hear that. I look forward to seeing the results of that.Is there a list kept of instances where calls have been misdirected or despatched to the wrongstate or territory? Would there be a central list of those sorts of occurrences?

Mr Day —I am not aware as to whether a list is kept specifically, but every customercomplaint that is made about 000 or any issue raised by 000 is investigated in considerabledetail. The technical system we have in place is one of the most modern in the world. As Isaid before, when you call from your normal fixed line phone that information is put straightthrough—the address and suburb—to the 000 operator as well as to the emergency servicebody. For that reason, we can tell, when somebody makes a complaint, exactly where the callwas handled, the time frame and the connection through to the emergency service organisation.We do that in conjunction with those bodies regularly.

Senator CALVERT—Would you keep a record of the 000 calls that are incorrectlyprocessed? Would it be possible to get a copy?

Mr Day —It is a situation of understanding what is meant by ‘incorrectly processed’.Senator CALVERT—Where someone rings up from, say, Canberra and wants an ambulance

despatched to Manuka and it ends up in Manuka in Queensland—if there is such a place inQueensland—or something like that.

Mr Day —Let me perhaps put this issue in perspective. There are about 12 million 000 callsa year. The instances we are talking about are very few.

Senator CALVERT—That is why I am wondering if you keep a record of it.Mr Day —I am sure, where issues have been raised as far as complaints are concerned or

where we are aware that those particular issues have occurred, there would be records of thoseparticular incidences.

Senator CALVERT—I do not expect an answer now. Could you take it on notice and, tothe best of your ability, give me the figures for the last 12 months. It could be that there have



been 12 million calls, and out of those 12 million calls it could be that 30 or 40 have beenproved to be incorrect or sent to the wrong state, something like that. That is basically whatI need to get some idea of the situation.

Mr Day —We can certainly take it on notice and, to the best of our ability, find out wherewe believe those things have occurred.

Senator CALVERT—I do not want the answer now because I think it would probably takea while but would it be possible to tell me how much it costs Telstra to discharge its govern-ment service obligation relating to the 000 service? What does it cost Telstra to operate it?

Mr Day —I can give you a ballpark figure. I believe it is around the $20 million a yearmark.

Mr G. Ward —We can provide that detail, Senator.Senator CALVERT—Do you get any assistance from the federal government for that?Mr G. Ward —It is part of our licence condition to operate.Senator CALVERT—So you have got your hand up your back! Is there are charter of

service principles, or similar, which operators must comply with for the 000 network?Mr Day —I am not 100 per cent sure. I can tell you our performance. I will just check a

piece of paper to get it exactly right. I think it is something like 95 per cent of our calls areanswered within 10 seconds.

Senator CALVERT—You might take that on notice as well.Mr Day —We could take that on notice. I am unsure as to whether there is a specific or

whether there is an indicative level. All I know is that with 000 we take it extremely seriously.I understand that we are performing above those levels of service that are talked about.

Senator CALVERT—With this proposed system of mobile location indication, do youbelieve there will be any privacy issues associated with that?

Mr Day —I am not really in a position to say. Certainly, the issue of privacy will alreadyhave been addressed when we looked at the situation associated with fixed lines.

Senator CALVERT—I am getting the nod over here to say no, so we will take that as ano.

Mr G. Ward —I do not believe there would be any.Mr Day —You have to remember that we are introducing for mobiles what already exists

for normal fixed lines but not down to the same level of physical identification.Senator CALVERT—What training do the current 000 emergency call operators receive

in respect to dealing with emergency calls?Mr Day —That is something which is probably best taken on notice to give you an exact

answer, but I can tell you that, obviously at the point of recruitment, there is induction trainingabout how to use the system, the sorts of phrases that are used, the sorts of processes that arefollowed through as well. We also know how important this service is, so we regularly reviewthat particular training and make sure that our operators are fully aware of the operation ofthe system, the operation of the process, the order—depending on whether you are a mobilecaller or a fixed line service caller—the sorts of statements that should be made and the sortof questioning that should occur.

Senator CALVERT—What I was looking for was: would you give different trainingbecause of the reason they are emergency calls? What difference would there be from the



training you would give to an 013 operator, for instance? You have high stress situations. Doyou cater for all that when you are training the 000 operators?

Mr Day —We certainly have different training for 000 operators because it is a very specificfunction that is performed and, as I said before, one which we take extremely seriously. Itcertainly is one where the manner in which we look at our training and the processes are muchmore stringent than what we provide for almost any other human provider services within thecompany, I believe. Yes, we do look at things like trauma training as well, so that people areable to deal with situations that come up and, of course, they are very distressful situationsand our operators share some of that distress as well.

Senator CALVERT—Finally, could you tell me the situation as far as a 000 service isconcerned in Western Australia, because I am sure Senator Bishop was going to ask thatquestion?

Senator MARK BISHOP—I just have one question for you, Mr Ward, on this issue. Backat the end of January, I needed to get the address of a branch of a National Bank near myhome in Nedlands in Western Australia. I dialled the 13 number on their leaflet and the callwas answered by an operator in Melbourne. It took me something in the order of 50 secondsto explain to her that the suburb of Nedlands was in the state of Western Australia and wasnot in Melbourne. Maybe that was why she had not heard of it. That took a long time. Thishad no consequence at all, but it would disturb me, and I suspect a lot of members of thecommunity, if, in an accident or emergency situation, your operators, because of unfamiliaritywith geographic areas outside their own state, took 50 seconds to patch through a police orambulance call. That was a sort of critical issue in the business arising out of Tasmania. Canyou tell this committee, and the press, that you have taken adequate steps within yourcorporation that guarantee 100 per cent that those sorts of problems will not arise in the future?

Mr G. Ward —I believe we would not take the decision of centralisation until those issueswere absolutely catered for in any restructured process. Apart from the mobile situation, whichMr Day talked about, I think by and large that is in hand.

Mr Day —I should make several points clear. First of all, I assume it was the 013 servicethat you were ringing.

Senator MARK BISHOP—No, it was the 13 number of the bank.Mr Day —In which particular case, I assume you were not talking to a Telstra employee.Senator MARK BISHOP—No. I have used this by way of analogy. I would not want to

take 50 seconds, if my wife happened to be dying on the floor, to get an ambulance to come.Mr Day —No. The situation of local knowledge of a particular call has been with us for a

long period of time because, as I said before, it is critical that we answer every call that 000makes, and 000 does not ring out. For that reason, the overflow system between the individualcentres has been with us for some while and has been an integral part of the system that isput in place. You may recall an enhanced 000 service probably about 2½ years ago where thisinformation is provided. The actual system is catered for so that, when information comes upor somebody says something, that information is put into the system and the actual locationis then identified. If it is various places, they come up as one or two different places indifferent states, so it is a very specific system built for—

Senator MARK BISHOP—Does the operator have a computer in front of them?

Mr Day —Yes, they have a system which gives them locality information and also thenumber that the person has to be connected to. If you ring from Western Australia and you



are answered in Melbourne, then when that call comes through, you select that andautomatically the number, which is your closest ambulance service, for example, is put throughand the customer is connected straightaway to that ambulance place. All the information istranslated through data links to that emergency service operation. The service we have inAustralia is one of the best services in the world. We take it extremely seriously not only froma technology point of view but also from a process and a training point of view.

Senator MARK BISHOP—Thank you, Mr Day. I do not have any further questions onthe 000.

Senator COONEY—I have questions that I would like to ask before we get to the issuethat I came for apropos the litigation between Telstra and ACCC. It is not so much directedto Telstra as to the courts. I have three questions. Is the litigation being dealt with by a docketjudge? Did discussions take place between ACCC and Telstra over what length of timebeforehand and are you still carrying on discussions now? The point of my questions is,clearly, any company, no matter how much they are earning, would be concerned to be inlitigation for a length of time. I am just trying to see what part the court is playing in this tosee whether it is done expeditiously.

Ms Weir—The proceedings were actually filed on Christmas Eve. The first actual directionshearing will be on 22 February.

Senator COONEY—Was that by a docket judge?Ms Weir—It was filed with the registry. I am not across the detail of how that will be

worked through.Senator COONEY—You do not know whether there has been a particular judge allocated

to this?Ms Weir—I am not actually aware as to who it will be.Senator COONEY—Are the discussions still going on now?Ms Weir—The difficulty is that there were discussions. The commission raised these

concerns about the churn process quite some ago. Telstra has modified its behavioursignificantly, following discussions with the commission.

Senator COONEY—You have got to the point where—Ms Weir—I think we have pretty much got to a point—Senator COONEY—That is all I want to get from you. It has got to the point where a

decision has to be made.Mr G. Ward —On the commercial churn issue, not on the other issues that we talked about

with the ACCC.Ms Weir—Those other issues are all draft decisions and going through public consultation.Senator COONEY—Mr Ward, can I turn to the issue that I am here about, the issue of Mr

Renshaw. Can I thank you for writing to me. I was quite flattered to have a person in yourposition write about a matter like this. A lot of employers could say that this is just a persondown the line a bit who does not really merit consideration, and I am glad to see that was notit.

Can I just make a few preliminary remarks that may save a lot of questioning, and you cancomment. What has happened is that Mr Renshaw has been punished for seeing me. I am sureyou would not punish people for seeing me because he was acting as a union representative.That has covered the situation and what has happened in the light of that is that he has been



counselled for not applying for leave. He says in a very convincing fashion to me and theunion that he did apply correctly. I suppose the inference, the perception, behind that is, ‘Well,look, I have been punished, not really because I did not apply in the correct form, but becausethis has been used as a cover to punish me for being a member of the union and for seeinga senator’. Perceptions are everything here.

You have got procedures to try to find the facts. Senator Bishop was talking about facts andthe law before. I think the law here, if I could say so, is fairly clear: if you are going to takeleave, then you should apply. The real issue is what the facts were. No doubt, being in theposition you are, you have to give considerable weight to the people that work under you. MrRenshaw clearly feels that he has applied and that the action taken against him may bepreliminary to him being dismissed.

I would like to see whether there is any process that can establish what the actual facts werein a dispassionate way. I suppose a manager has to support the position he or one of his fellowmanagers originally took. I am not saying that that leads to him making a wrong decision, butthat perception is there. I do not want to make this an Archer Shee case or be an EdwardCarson but, to put the problem back on you, can you see any way whereby that issue of factcan be decided in a way which is fair? Having approached this in the way that you have, Iam sure you do want to see that.

Mr G. Ward —I recall our engagement last year and my writing to you. My memory ofthe situation is that we took action on the management involved to ensure they were very clearabout what was required of them in making it quite clear to employees that leave was requiredbut there was no hint that the fact the leave was being used to see senators was an issue withthe company at all.

Senator COONEY—Or the union issue.

Mr G. Ward —Or the union. I think we had concerns that we needed to address with themanagement, which I believe we did. Then we had to counsel the employee about the needto put in for leave. That is where I left it: that that management counselling and employeecounselling, hopefully, had cleared the air. I do have a vague memory there was an issue ofa car involved, as well—

Senator COONEY—That was cleared up.

Mr G. Ward —which I think I was quite keen to make sure was redressed, and I think itwas.

Senator COONEY—You did that and I am remiss in not thanking you for seeing thoseprocedures properly carried out.

Mr G. Ward —That is where I would have left it. I think that would have been three-quarters of the way through last year or a bit over half-way through last year. But I am happyto address whether there are any underlying issues or the thing is taking on some new formof perception. I would be certainly happy to address that.

Senator COONEY—Thanks for that.

Mr G. Ward —But at the moment, I cannot add any currency to the—

Senator COONEY—I think the apprehension is not those two things that I have pointedout but that this is preliminary to him being dispensed with, other than on the merits. Thankyou.

Mr G. Ward —We will take another look at that.



Senator COONEY—I had better get permission about that letter, and if that is all right,I might send that to you.

Mr G. Ward —That would be good.

Senator COONEY—Thanks for that. I will get this letter to you when I get it cleared, inthe sense of getting permission from the writer to send it to you.

Senator LUNDY—I have a series of questions for Telstra with respect to their Y2Kpreparedness.

Mr G. Ward —Thank you, Senator. Mr Stanhope was getting a little anxious.

Senator LUNDY—It is a good way to introduce him, Mr Ward, on this issue.

Mr G. Ward —It is.

Senator LUNDY—I note with interest the comments in the annual report with respect toTelstra’s program for Y2K remediation and contingency planning. Can you provide a briefdescription on your program to date, levels of expenditure to date and anticipated time of whenyou think you will be able to test for 100 per cent compliance?

Mr Stanhope—We are a good way through the remediation of our systems. In fact, weprioritised them into priority one systems or critical systems. We had a little bit of a carry-overin the 1998 year, but it was planned to have the major network systems all remediated by thatdate. Whilst there was a little bit of a carry-over into January, all those network systems havebeen certified year 2000 compliant.

The rest of the program, going through the rest of this year, is primarily about non-criticalsystems. That program is on track as well. We also have business continuity plans in placeso that, come the revolution—the year 2000—we have risk management in place in that wehave continuity plans so that if something falls over we are able to continue business.

The third part of your question was about expenditure. Right back at the stage of theprospectus I think we said we would spend about $500 million on year 2000 remediation. Weare nowhere near that yet. We are getting close to the $200 million or $300 million mark. Forthe whole program we expect we will not spend the whole $500 million—it will be downtowards $400 million.

Senator LUNDY—With respect to upstream and downstream business partners, what isTelstra doing to advise them of your remediation program?

Mr Stanhope—There is a lot of activity between Telstra and customers with respect to theinteraction between particularly large customers such as banks, government and also oursuppliers. There is a lot of interaction between Telstra and our major suppliers. In fact, wejust finished some testing between Sing-Tel and Telstra to make sure that our internationaltraffic between the two carriers works in a year 2000 context. That is all part of the year 2000program. We are obviously not just looking at our internal systems.

Senator LUNDY—When you claim that you are either close to or have met compliancerequirements for your networks, does that include business partners such as carrier partnerswhere you have signals that go across more than just your network?

Mr Stanhope—Yes—the carriage of traffic between us and service providers, and carryingof air customers traffic as well.

Senator LUNDY—How do you express that in terms of the statements you make; that is,are you working from assurances provided by those partners and those other corporations?



Mr Stanhope—In most cases we seek certification from our suppliers of software that theirsystems are year 2000 compliant. Where we might have some doubts, we will do anothertesting of it to make sure that they are year 2000 compliant.

Senator LUNDY—How many people have you actually had working on this? For instance,have you contracted out your compliance program or part of it, or allocated certain staff tothis particular project? Can you briefly describe your arrangements?

Mr Stanhope—There are internal Telstra employees working on it. There is a project teamheaded by Negba Weiss-Dolev who you have probably seen press articles about. There is aproject control group within the company. Sitting on top of the structure is the project controlgroup that Gerry Moriarty—our managing director of the network technology group—chairs.They monitor this very closely. The board gets a report at every board meeting about the year2000 program. Those people engaged on it are also contractors from outside the companyworking inside Telstra. IBMGSA, whom we have outsourced a lot of our IT output applicationdevelopment to, are also working on it. It is a complete mix of vendor people, Telstra peopleand application development type of shops, like IBMGSA.

Senator LUNDY—One final question in respect of that: I note that, in the US, the FederalCommunications Commission has issued a series of orders about public safety and hasidentified the telecommunications infrastructure as a critical element for governments to beable to provide some assurances to such public safety services as emergency services. Whatlevel of involvement has Telstra had of working with the government in providing those kindsof assurances for emergency service networks?

Mr Stanhope—I could not answer that question as a direct interaction; but, as part of theassurance of the network operations, there would be an assurance that the emergency servicespart of the network worked, as well. I can take that on notice to tell you if we have had anyspecific interaction with government.

Senator LUNDY—Mr Ward, did you have anything to add to that?

Mr G. Ward —No. I was just encouraging John that we take that one on notice becauseit involves a level of detail; but I am quite sure he is right. We have been alert to the Y2Kcompliance issue and the important role we play in Australian society on that. Our board hasgone to great lengths and ensures that, at every board meeting, there is a standing item on it.I think we are pretty much ahead of the game; but we will provide that detail.

Senator LUNDY—Thank you. Going to your point, Mr Stanhope, about the role thatIBMGSA has within Telstra, my understanding from your annual report is that there has beenan equity transfer with IBMGSA and that that has involved them picking up some of yourassets and a transfer of staff. Can you explain the relationship between you and IBMGSA?

Mr Stanhope—We have a 26 per cent equity in IBMGSA. The arrangement was that equitycame about through us outsourcing some of our activities to IBMGSA, and IBMGSA also tookon some of our assets, such as the data mainframes and so on.

Senator LUNDY—Can you describe what you mean by ‘data mainframes’?

Mr Stanhope—I mean the main operational centres, the data processing centres.

Senator LUNDY—Does that include all your customer information?

Mr Stanhope—Part of the arrangement with IBMGSA was that we would continue tomanage and run our own billing system.

Senator LUNDY—IBMGSA do not have anything to with it?



Mr Stanhope—The processing of bills still runs through those data processing centres. Thecontrol of our billing system, and the application development or any enhancements to ourbilling system, we do in-house. That is where most of the customer information resides.

Senator LUNDY—When you say ‘resides’, if we are talking about the physical mainframeand the control of that, is that control in the legal sense, or control in a more tangible sense?

Mr Stanhope—The people who run the data processing centres are IBMGSA people.Senator LUNDY—That is where the mainframes with the customer information are located?Mr Stanhope—The data is ours; they do not own any of our data.Senator LUNDY—How is that relationship with IBMGSA governed in a legal sense? Is

it defined in any of the arrangements what they can and cannot do with that data?Mr Stanhope—There are contractual arrangements in place as to what they should do, what

confidentiality there has to be, and who owns the intellectual property. It is quite a detailedcontract that governs that arrangement between us and them.

Senator LUNDY—How could consumers, your customers, be confident that informationabout their billing, their phone, not be used for purposes other than just for Telstra’s billingpurposes?

Mr Stanhope—They have the confidence that there are strict confidentiality arrangementsbetween us through that contractual arrangement.

Senator LUNDY—But how will they know? You can provide a guarantee to them ascustomers but have you got any way that you can demonstrate by, perhaps, making public thecontractual arrangement and so forth to consumers so that they can be confident in thosearrangements?

Mr Stanhope—I do not know that we would make public the commercial arrangementbetween IBMGSA and us. We could give assurances to our customers that, with regard to thedata that we have on the customer, we go to all lengths to protect it. That is all we can do.

Senator LUNDY—I will use an example where I have a complaint from a constituent ofmine who receives one of these ad hoc emails selling email addresses for a certain amountof money, for whatever purpose. How can you guarantee your customers that none of thisinformation can be sourced through Telstra’s customer database?

Mr Stanhope—We go to great lengths to try to protect that information. Part of theIBMGSA arrangement and what is in that contract goes to those lengths. Customers can takesome solace from the fact that when the Privacy Commission has had a look at Telstra theyhave had a lot of good things to say about all the actions that Telstra takes to protect customerinformation.

Senator LUNDY—Has the Privacy Commission had a look at Telstra since you haveoutsourced your customer data services in this way?

Mr Stanhope—I suspect they have but I would have to take that on notice. It has not beenso long ago.

Mr G. Ward —I think they have, too.Mr Stanhope—We will take that on notice.Senator LUNDY—Certainly, take that on notice, but are you aware of any recommendations

arising out of that investigation or that scrutiny by the Privacy Commissioner on the way youactually handle information?



Mr Stanhope—I am not aware of any specific major recommendations. There may havebeen some minor recommendations but, at the end of the day, it was a good scorecard.

Senator LUNDY—Can you provide the committee with the details of what the PrivacyCommission recommended?

Mr Stanhope—Yes, I think that is okay.

Senator LUNDY—And your response. It sounds like you are at least concerned about theissue, so any information you can provide that will go towards assuring customers furtherwould be useful.

Mr Stanhope—Okay.

Senator LUNDY—Just going a little further with respect to the relationship with IBMGSA,you mentioned the 26 per cent equity. My understanding from your annual report is that thatinvolved a transfer of 2,100 staff from Telstra to IBMGSA. It also notes in the annual reportthat, if you do not purchase certain volumes of services from IBMGSA over a 10-year period,which I presume is the period of the contract or the arrangement, you have agreed to payhigher rates and penalties. Can you explain what that means and what higher rates, penaltiesand services that would be attributed to?

Mr Stanhope—I cannot tell you what the higher rates will be, but as part of thatarrangement and as part of our getting the 26 per cent equity, there were some guarantees ofspecified volumes, and if we do not reach that volume of work, then there is that agreementthat they can charge higher rates and a penalty. That was part of the arrangement at the time.They put a value on that; we put a value on that. At the end of the day, we get a 26 per centequity in that company as a result. In going into that arrangement, we had a level ofconfidence that we would be able to meet those volumes of work.

Senator LUNDY—I presume so, Mr Stanhope.

Mr Stanhope—We do not expect to have to pay them.

Senator LUNDY—I presume you are at least confident about meeting them, otherwise onewould question your sanity. In terms of the actual volumes of services that are specified—andI am taking this straight out of your annual report—there have been so many changes withconvergence, with a shift of Telstra’s focus to an information services company et cetera thatI wonder what level of risk can be attributed to those sorts of commitments, given thesignificant changes in Telstra’s direction? Or is it related more to a particular aspect of thetechnology that you engage?

Mr Stanhope—I would say the risk is lessening that we would not meet those volumesbecause, as we move forward in technology, more and more it is software based, and moreand more we are asking for application development. So the risk of not meeting those volumesis diminishing rather than increasing.

Senator LUNDY—With respect to 26 per cent equity in IBMGSA, what is that worth incurrent dollar terms?

Mr Stanhope—I have not looked at the value of IBMGSA for some time. The actual equityin our accounts is quite low—I think it is about 26 shares at $1 each. The actual value of thecompany I have not valued for a while. We get a dividend stream, of course, as a result ofthat 26 per cent equity.

Senator LUNDY—Is the dividend stream listed in the annual report?



Mr Stanhope—Probably you will not see IBMGSA dividend, you will see dividends fromother entities; it will be part of that.

Senator LUNDY—Could you take on notice to provide the committee with details of thedividend stream from IBMGSA and the current value of your equity holdings in IBMGSA?

Mr Stanhope—Certainly.Senator LUNDY—Thank you. IBMGSA, I understand from this, is IBM Australia, 51 per

cent; Lend Lease, 23 per cent; and the remainder, Telstra. The other entity listed here, withTelstra holding a 50 per cent interest in it, is Advantra.

Mr Stanhope—Yes.Senator LUNDY—Can you explain what distinguishes Advantra from IBMGSA, given the

equity partners are the same and the proportions are almost the same between those twoentities?

Mr Stanhope—As part of the negotiations with IBM to take an equity in IBMGSA, we alsosaw that the two companies, IBM and Telstra—not Lend Lease so much but those twocompanies—had some synergies in other areas and we decided to form a company calledAdvantra, which is primarily focused on facilities management and IT management of largecorporates. We had a group of people inside Telstra that performed that function. IBM hada group in their company in Australia that performed that function. We put them together. Thatcompany goes out in its own right to seek that sort of work. Telstra still has the ability andright to go out and seek that sort of work in their own right, as does IBM. So it is just anothercompany in the field of facility management and system integration.

Senator LUNDY—Why didn’t you stick with IBMGSA, which does the same kind of thing?Mr Stanhope—IBMGSA is quite a different business. It operates data processing centres

and it does application development work. Advantra’s function and business is quite different.It is managing IT networks for large corporates, managing all their facilities—local areanetworks, mainframes and so on.

Senator LUNDY—But isn’t that what you just said IBMGSA does?Mr Stanhope—No, IBMGSA writes software, primarily.Senator LUNDY—So is that the only distinction between the two, that IBMGSA does aps

development and Advantra does not?Mr Frueh —They are not the same shareholding.Senator LUNDY—I appreciate that there is a distinction between the equity partners.Mr Frueh —Lendlease is in there in the IBMGSA case, so there are different commercial

arrangements as well, from that side.Senator LUNDY—Could you explain the significance of the differing commercial

arrangements between the two companies?Mr Frueh —As John indicated, they are targeted at different purposes recognising two

different needs. One is the outsourcing requirements of Telstra itself in regard to its dataprocessing and application development, and that is common.

Senator LUNDY—That is IBMGSA?Mr Frueh —IBMGSA seeks that sort of work from other players, such as federal government

contracts and those sorts of things. Lendlease is also a participant in that. It is a three-waydeal, if you like. The Advantra offering tends to compete for more solutions right through to



the desktop—or, if you like, a slightly different solution set—but with a significant ongoingfacilities management component, so they have different target applications as well. There areonly two parties in that, and it is a fifty-fifty deal.

Mr Stanhope—Lendlease is also part of Advantra.Senator LUNDY—For the record, it is 51 per cent IBM Australia, 23 per cent Lendlease

and 26 per cent Telstra.Mr Stanhope—Yes.Senator LUNDY—Do they all have equal status on the board? Do they all have board

representation?Mr Stanhope—Yes, we have membership on the IBMGSA board and the Advantra board.Senator LUNDY—Who are Telstra’s representatives on the IBMGSA board?Mr Stanhope—Gerry Moriarty and Paul Rizzo, I believe.Senator LUNDY—With respect to Advantra, IBM has 30 per cent, Lendlease 20 per cent

and Telstra 50 per cent?Mr Stanhope—Correct.Senator LUNDY—Who are your board representatives on the Advantra board?Mr Stanhope—You are testing me out a bit here. I think they are Lindsay Yelland and

Ziggy Switkowski—Gerry may be on that board too. I can let you know for sure.Senator LUNDY—With respect to Mr Frueh’s comments, my understanding of IBMGSA

is that they also do provide vertically integrated services from desktop to mainframe, so I amat a bit of a loss as to how you distinguish where they are fitting into the marketplace. Allwe have been able to ascertain at this stage is that Advantra might not do applicationsdevelopment. Could you provide the committee with a full description of the scope of worksfor those two companies and also whether or not they have been in the position of tenderingagainst each other in the course of seeking work in the marketplace?

Mr Stanhope—Okay.Senator LUNDY—Minister, if that is the case, would you care to express a view on the

ethics of those two companies competing against each other in the marketplace in theirrespective areas of IT outsourcing of either corporate or public IT services?

Senator Alston—I had never heard of IBMGSA until a short while ago. From what I haveheard, it sounds to me as though they are not necessarily competing against one other anywaybut, if they were, I do not know that that is a problem. It is called cannibalisation. I supposeif you wanted to embark on that consciously I presume you would be doing it for commercialadvantage. I cannot see why they would be doing it to disadvantage themselves. I do not seethat there is any ethical problem involved.

Mr G. Ward —I do not believe IBMGSA and Advantra are really in competition. As MrStanhope said, certainly Telstra, IBM and Advantra are in competition. In some ways, theyare chasing the same corporate markets but—

Senator LUNDY—You have anticipated my next question, Mr Ward.Mr G. Ward —I do not believe IBMGSA and Advantra are really head-to-head—they are

quite separate foci—but we need to give you more detail on that.Senator LUNDY—It is an interesting area. The example I am most familiar with is the

government’s IT outsourcing program, where you have this range of players, including Telstra



themselves, tendering on different aspects of the program. It is interesting when that is relatedback to the arrangements between Telstra and IBMGSA internally—and the relationship thatthat they may subsequently have in terms of Telstra owning equity in IBMGSA—and theirability to secure quite lucrative contracts with the federal government, given it has been widelyreported about the massive growth in bottom line of IBMGSA, particularly since securingCommonwealth government contracts.

I have a couple of questions with respect to other corporate relationships Telstra has. Firstly,I would like an update on what is happening with the World Partners issue. I refer again tothe annual report when AT&T announced that they would not be continuing with WorldPartners. What is the current state of play with Telstra with action arising out of that?

Mr Stanhope—When we took some equity in World Partners, we had a right, if it did notcontinue, to put a put option to get some of our money back. We exercised that right inDecember, so, in exiting World Partners, we are getting all that is due to us.

Senator LUNDY—Getting your money back?Mr Stanhope—Not all of it.Senator LUNDY—How much of it, Mr Stanhope?Mr Stanhope—We are getting three-quarters of our money back.Senator LUNDY—About $15 million?Mr Stanhope—Yes.Senator LUNDY—In the annual report under ‘legal proceedings’ it states that proceedings

against AAPT have been set down for trial in the federal court. Can you advise me if that isrelated to World Partners or if that is a separate issue?

Mr Stanhope—No, it is a separate issue.Senator LUNDY—What is happening with those proceedings.Ms Weir—The Supreme Court proceedings, Senator?Senator LUNDY—I am just referring to the annual report, which talks about the Federal

Court of Australia. I am looking for an update on where that is headedMr G. Ward —It is separate from the actual churn procedures. It is not unrelated, though.Ms Weir—It is a billing dispute in relation to difficulties each side has with the other. I

am afraid I do not have a detailed update on that one at the moment. I can provide you witha status report, if that would be helpful.

Mr Stanhope—The AAPT trial date is set down for 2 August 1999. We are still talkingto AAPT about trying to reach a settlement, but that is the trial date that is set.

Senator LUNDY—If I could take up Ms Weir’s offer to provide a status report, that wouldbe useful. Based on issues traversed earlier this morning with the minister in a differentsection, we spoke about Telstra’s corporate relationships but particularly that with ninemsn.Are you able to provide an explanation of the alliance with ninemsn?

Mr Stanhope—Yes, I can. As you probably know, ninemsn provides Internet based contentthrough a web site, www.ninemsn.com.au, and the majority of that content is freely availableto all Internet users.

Telstra, through On Australia, which is a 100 per cent owned Telstra subsidiary, providesconsumerised PC services under the brand name Big Pond. On Australia, our 100 per centowned company, has contracted ninemsn to provide content for its customers. That is not



generally available on the Internet, but that relationship is not exclusive, so the content thatis provided to Big Pond customers could be made available by ninemsn to general Internetpublic, or other ISPs for that matter, at their discretion. On Australia pays for that contentinstead of the customer having to pay ninemsn directly for access. We believe that enhancesour Big Pond service.

In establishing that relationship—and we publicly announced this—Telstra took over theISP services that ninemsn decided not to continue with. The customers have an option totransfer or cancel their accounts. The option to transfer has now passed and all previousninemsn ISP customers are either customers of Big Pond or another ISP or they have cancelledtheir Internet access altogether. That is the extent of our relationship with ninemsn.

Senator LUNDY—When you say ‘contracted to’, what is the nature of that exchange? Thatis, how much does that cost Telstra or what has been exchanged in return for that serviceprovision?

Mr Stanhope—I would have to take on notice the cost. There may be a commercialagreement there that we cannot release, but the nature of what they are contracted for is toprovide content to go on to Big Pond on our Internet service. As I said, it is not an exclusivearrangement. That content can, if ninemsn so choose, be provided to other ISPs.

Senator LUNDY—What about Telstra’s Big Pond entering into the same arrangement withother content providers?

Mr Stanhope—On Australia, which is managing this content provision, has variousarrangements to try to get content improvement on Big Pond. It is not just ninemsn.

Senator LUNDY—Like what? What other commercial arrangements has Big Pond enteredinto for the provision of content?

Mr Stanhope—I would have to take on notice who they are with. There are other contentproviders and other people working on content for us to enrich Big Pond. As to who else, letme take that on notice.

Senator LUNDY—Also if you could take on notice what the exchange was in terms of costto Telstra for contracting ninemsn’s content in that way or what services were exchanged. Myunderstanding is that it did involve more of an exchange in billing services involving—

Mr Stanhope—I will give you the nature of the consideration in that contract.

Senator LUNDY—Going back to issues of privacy that I raised earlier, in the relationshipthat Telstra has with ninemsn, how is the privacy of Telstra’s Big Pond customers protectedin relation to ninemsn? Do they have access to those customer details and their customerdatabase?

Mr Stanhope—As far as I am aware, they do not, because they are contracted to providecontent only. But I am happy to check that for you.

Senator LUNDY—One of the features, of course, of the Internet these days, particularlyfor content sites, is the ability of the managers of those sites to monitor access and usabilitythrough back-end programs sitting on the site—you know who has come, how long they havespent on what page, et cetera, et cetera. Is that occurring with respect to Big Pond customersutilising ninemsn’s content? If so, who has the ownership of the data that is collected? Whois it collected by? Where is it stored? How are Big Pond customers, as opposed to ninemsncustomers, advised of what they are getting themselves involved in when entering into ninemsncontent sites? If you could take all that on notice—



Mr Stanhope—Yes, I do not have all that detail.Senator LUNDY—that would be most useful, thank you.CHAIR —Is that about all, Senator?Senator LUNDY—I have a couple of questions about data mode of operation. I note with

interest references in your annual report and in the media about this particular roll-out. I wantto explore its purpose with respect to the provision of data services, particularly where itsorientation will be—for example, business-to-business data services or residential dataservices—what approach you are taking, where you are focussing your investment in DMOand what the revenue stream will be.

Mr G. Ward —I think I will need to rely on Mr Frueh for the business focus and Mr Paratzfor the network elements of it. Perhaps we could start with the latter and maybe Peter couldthen say something about the business focus.

Mr Paratz —The DMO work is still at an ‘in progress’ stage. It really is about Telstraunderstanding a construct for its business and its customers’ business into the future. So it isa business proposition instead of network investments. At the moment, Telstra has gonegenerally to the supply industries looking for propositions for technologies to support itsconcept of DMO. Those tenders have not yet been determined or announced, so it is a littlepremature to actually talk about specific technologies and roll-out plans. The DMO is verymuch about an online environment both in the business process and in the facility forcustomers and the technologies that support it.

Senator LUNDY—It states here you are moving to manage that network traffic throughInternet protocol. Does that include voice-over IP?

Mr Paratz —It is entirely likely that the DMO paradigm will include voice and IP. We areseeing the importance of voice and IP increasing not only as a result of the DMOconsiderations but also generally in the interactions we have with our customers and othercorresponding parties.

Senator LUNDY—I remember at previous estimates hearings and various inquiry hearingsdiscussing the notion of timed data calls, particularly with respect to the business-to-businessmarket. Do you envisage that the DMO network and what you are proposing with that willstill have a completely open scope within what you are obligated to provide under the act interms of untimed calls for consumers who currently under the act are required to be providedwith an untimed call option?

Mr Frueh —I think I understand the question, Senator. I think I will make a generalcomment at this stage. We are tracking the usage of our network carefully as more and morecustomers are using the Internet.

Senator LUNDY—Yes, I have watched with interest the rising graph of data.Mr Frueh —That is right. Again, Mr Paratz could give details, but we clearly keep that in

mind in doing our capacity management of our network to make sure that all services for allcustomers are adequately covered. I think what we are recognising now as a worldwide trendis that the industry itself is responding with a sort of a re-engineering of the whole network.The main focus of this study is to make sure that we have available in Australia the mostappropriate architecture to support that environment.

Again, Lawrence could probably give a technical assessment, but I think at this stage wesee no major exposures in carrying our current network forward to integrate into that newenvironment even though the exact nature of that is still to be worked through. We do not see



that we are going to be constrained and have a difficulty in the shorter term. There are riskfactors associated with any new technologies. That was one of the reasons why we representedthe case fairly strongly several years ago as we were going into an uncertain environment, ifyou like, to retain our ability to manage the environment. I would say at this stage that wefeel pretty confident that we will be able to work our way through those issues.

Mr Paratz —The investments we have made into digital technology over recent years havereally created the platform for that move forward.

Senator LUNDY—On that point, I recall a speech by the minister. I cannot quite rememberwhat conference it was at, but he referred to Telstra moving into the e-commerce area andoffering an e-commerce product and the notion of levying transactions via that e-commerceproduct. Can you provide some background as to where Telstra is at in the development ofe-commerce type products and how you envisage the revenue stream operating from thoseproducts?

Mr Frueh —As a general comment, Telstra does have a broad range of interests in servicesthat extend right through to some of the content base services and to working with our largercustomers, in particular, and our mid-size customers to provide a vehicle where they can goonline themselves. As a service provider in Australia, we see a great opportunity to assistAustralian businesses, in particular, moving online and offering their services worldwide andso on. Many of our customers come to us for support in doing that sort of activity.

In regard to specific products, we have a range of different things that we have developedin the past. We have our Surelink product, which you would be familiar with, I am sure. Wealso have under development another product called ‘purchase.net’ which is still at early stages.It is more of a development product which we believe will provide a vehicle for providingtransaction based services, particularly in the supply chain, so that larger organisations canelectronically purchase and pay for equipment through a wide range of suppliers. We havethat in trial ourselves and also with several customers in pilot mode. We have other servicesthat we have introduced. As you know, this area is moving very fast. There are risk factors,obviously, in putting product in that market, but we believe that we need to do that to meetthe full requirements in Australia and the potential that is there.

CHAIR —Senator Lundy, we are half an hour behind now, and Senator Boswell wants toask some questions.

Senator BOSWELL—I have been waiting very patiently.Senator LUNDY—He is very patient.CHAIR —So could you wind up this line and—Senator LUNDY—Yes. What I am seeking is some assurances, one, that the DMO was not

going to be locked up just for business-to-business or corporate customers—and I have that—and, two, that the notion of applying a levy to transactions is not something that is going toplace a restriction on consumers generally utilising the e-commerce product.

Mr Frueh —No.Senator LUNDY—It sits within your business models.Mr Frueh —As you know, it is a very competitive market and there are many different

models that are emerging. The long-term commercial or viable models that link residentialcustomers to one another and to businesses have really yet to emerge. I think that is one ofthe worldwide challenges. There are a lot of people investing a lot of money in the Internet,but there are not too many people making strong commercial returns. Most people who are



in that believe that with the large take-up now that people will move significant parts of theirbusiness online.

Senator LUNDY—Is there any reason why the arrangements with ninemsn do not appearin the annual report?

Mr Stanhope—Most of the arrangements have been more recent than when we actuallypublished the annual report. They will have to be part of our half-year disclosure.

Senator LUNDY—Okay.CHAIR —Senator Lundy, I really think I should hand over to Senator Boswell.Senator LUNDY—I have one last question, and that is the extent to which Telstra is

involved in any way with any datacasting service or datacasting project.Mr Frueh —Sorry, I did not catch the question.Senator LUNDY—Is Telstra currently involved in any datacasting project or proposal, joint

venture alliance or partnership?Mr Frueh —I do not believe we have any commercial arrangements in place. I will have

to take it on notice to see whether there are any discussions under way.Senator BOSWELL—I would like to ask Mr Levy a question. Is he available?Mr G. Ward —Yes, he is.Senator BOSWELL—Is there anyone else on the CoT case?Mr G. Ward —We have Mr Benjamin and Mr Armstrong here.Senator BOSWELL—Could they address the table?Mr G. Ward —Do you want all three?Senator BOSWELL—Yes, if we can. Mr Armstrong, I put a question to the minister and

I requested him to find out for me how much cost Telstra has incurred in defending the CoTcases up till now. I am sure he would have asked you to provide that answer. Do you havethat answer at the moment?

Mr Armstrong —I do not physically have it on me.Mr G. Ward —If I have the right question, my understanding is that we have provided that

through to the department. Whether it has got to the minister or not, I do not know.Senator BOSWELL—The minister answered a question in the Senate, but it did not take

up from the last six months. I wanted it up to the current time.Mr G. Ward —My understanding is that we have actually put in an answer in the last few

days.Senator BOSWELL—Would you have the answer now?Mr G. Ward —I personally do not have it. We can get it fairly quickly, I guess.Senator BOSWELL—While you are on that, could you also provide how much the working

party has cost.Mr Levy, yesterday you wrote to Mr Wynack, the Ombudsman, on the special references

that Ann Garms had put in. In that letter you said that there was no such list, that you hadnot prepared any answers to the special requests. You said that the search was designed tocapture the widest possible range of information without specific reference to the wording ofMrs Garms. In relation to the specific submissions complained of by Mrs Garms you said that



you reiterated that the searches would have captured all available relevant information withoutany direct reference to the wording of Mrs Garms’s submission.

I ask you why you chose not to address Mrs Garms’s special list of document requests whichhad been assessed by AMBIDJI as reasonable and being the subject of the meetings,discussions, searches and visits between you and Mr Wynack? Mrs Garms put in a specificlist of requests—which are those—and you have not answered those specific requests.

Mr Levy —Senator, there are a couple of points. The assertion that you are putting forwardis not correct. I would like first to comment on the overall search procedure which was a finalsweep search. There were thousands of documents provided under various mechanismspreviously. The final search sweeps for the various claimants, including Mrs Garms, wasconducted on a basis of ‘if in doubt, get it’. We specifically looked at the organisation andits structure over a number of years and at the areas within the organisation that may havegenerated documents, contained documents or created documents. We then looked at thepeople who were involved over those periods of time and whether they still existed; we alsolooked at the relevance of all those areas to the types of generation that they would generateand its relevance to the claimant services.

It is from that that we produced some documents which are loosley called search locationdocuments. These were provided to the chair, Mr Wynack of the CommonwealthOmbudsman’s Office, and also to the claimants. This gave the overall methodology of athorough search of all the possible locations within Telstra.

If I may, I will come to the specific point of Mrs Garms’s questions. During the procedureof looking at this final sweep process, a number of submissions were received from Mrs Garmsand other claimants running into, I think, hundreds of pages. Some of the questions were sowide and encompassing, it was not reasonable to consider an answer because they were global.Not wishing to be in the position of arbiter we asked, via the chair, the AMBIDJI group tolook at these documents to determine relevance to the issues in hand, that is, the customerservice difficulties and customer service in general. The AMBIDJI group came back with aseries of recommendations, one of which was that there should be some scoping down of thequestions. With regard to Mrs Garms, the scoped down questions were larger and moreencompassing than the original ones.

We decided to make sure that the key points of Mrs Garms’s questions were covered in thesearch procedures, as determined by AMBIDJI at a meeting chaired by Mr Wynack, at whichMrs Garms was present, and so the document searches were carried out. With regard to MrsGarms’s search, Mr Wynack was present. There were literally hundreds of interviews carriedout with Telstra staff, hundreds of locations visited and more than 100,000 dockets recovered.

Senator BOSWELL—I am sure you did a great job, but that is not what I am asking you.There is a list of requests from Mrs Garms. Mr Armstrong, at Telstra’s insistence, asked CoTmembers to narrow down their requests and to be specific, and CoT members went to a lotof trouble to be specific—all the documents are there. Those specific documents were givento AMBIDJI, and they said that the search for those documents was a reasonable request. IfMr Armstrong asked you to search for them, and if Mr Armstrong, in a meeting with CoT,agreed, ‘Put your specific documents down,’ why didn’t you address the specific questionsthat were asked in these requests?

Mr Levy —We did address specific questions. In fact, there was a question list generatedfrom Mrs Garms’s requests, which was provided to the working party but was not used as ashopping list because that would artificially constrain our searches in the early stages. The



searches were wide, encompassing, and we are confident that we recovered everything thatcould have been recoverable. Included as a subset of that would have been the information,if it was available, pertaining to Mrs Garms’s specific points.

Senator BOSWELL—Mrs Garms is saying that she made description requests andAMBIDJI said they were reasonable. The comment was that Telstra omitted the Ericssonsrequest completely from the Brisbane document search list and no document was provided.This working party was set up and Mr Armstrong, at Telstra’s insistence, asked the CoTmembers to narrow down their request—they have done that; they have done a lot of workon it—and you go out and take a broad sweep. All they wanted was the answer to theserequests. You said you provided more. That is not what they wanted. They wanted thoserequests.

Mr Levy —I want to comment with regard to what AMBIDJI said after the review of thescope of the questions. When they made a comment that it was reasonable for the claimantsto request certain information or documents, and that it was reasonable to provide thosedocuments, the rest of the statement was: if they were created and exist. One of the things wedid not want was to have a shopping list approach which would limit the constraint of oursearch. In fact, in one of Mrs Garms’s questions, if we had taken it literally, we would havefound nothing. However, because of the widened scope, we found further documentation.

Mr Benjamin —I will give you an example of that, Senator. The request might state:produce documents for a particular unit. That unit might only have existed for a short periodof time and no longer exists. If we looked for documents for that unit, we would have coveredonly a short period of time.

Senator BOSWELL—What is the point of going through a process? If you came here andsaid, ‘Look, this is what we were asked to do, we did it and it turned up nothing.’ I could say,‘Well, you did what you were asked to do.’ I would prefer that than to have been deluged withdocuments. Let us go through this again: you were asked specifically why you did not do it,and you told me, virtually, because if you did what was requested you would have got nodocuments. Is that what you are saying?

Mr Benjamin —You might have got documents for a small period of a certain range offunctions.

Senator BOSWELL—But at least you could say, ‘The CoT people have asked the wrongquestions. They have got the answer that they deserved. They have not got their documents.It is their fault. They have stuffed it up.’ But what you are doing is not doing what MrArmstrong set out to do in his meeting with Mrs Garms. You have taken a broader approachthat has not turned up the documents.

Mr Armstrong —With respect, if we had said, ‘You’ve asked the wrong question. You didnot get your documents. Bad luck!’, I think people could rightly have criticised us and said,‘Look, these people don’t necessarily know exactly what they are after.’ If someone asks fora set of documents, we say that these different groups across the company may have createdthem at different periods of time, and we will try to go out and cover the whole period of theclaim and get that type of document. We do not care which group generated it or what itsname was; we will get the best set that we can. If we came here and said, ‘Sorry, documentswhich could have been relevant weren’t asked for so we didn’t get them,’ I would havethought we would be subject to some pretty severe criticism.

Senator BOSWELL—In the case of Plowman, there are a number of document requests.The first one was a list of all exchanges as per the revised submission and Telstra diagrams,



which had: ‘more than 25 circuits, more than 10 circuits, less than 10 circuits, looking at theBentnick Hotel. Note the request refers to ARK technology’. The remarks from AMBIDJI saidthat it was okay; it was a reasonable request. Then you go down Telstra supporting documentsidentified by CoT: ‘Telstra network diagrams, Plowman map identifying the network, Telstra’strunking’. Then you go into ‘network information identified, Telman trunking diagrams’.Telstra’s departments are listed, and then ‘Telstra’s documents search list—questions: nil’. Youhave not done a search for those requests. Do you understand where I am coming from?

Mr Levy —I know what you are saying, but the assertion is not correct because we havedone a very thorough search for Mr Plowman covering all of those areas.

Senator BOSWELL—If you have done a thorough search, why is it that Mr Plowman askedyou to go through all those documents and asked your departments to seek out thosedocuments, but you have not asked your departments?

Mr Armstrong —What document are you referring to?Senator BOSWELL—This is a request for documents by Plowman, and this was what he

submitted.Mr Armstrong —Is that a Telstra document? Have we put ‘nil’ in the column?Mr Levy —I do not know what documents you are referring to, unless ‘nil’ in the column

means—Senator BOSWELL—All right, I will table the documents.CHAIR —Senator Boswell, you will need to identify the documents specifically and table

them.Senator BOSWELL—I will table the documents in a minute. I will pursue this line of

questioning.CHAIR —I think you have to let these people know what it is you are talking about.Senator BOSWELL—In relation to the other four CoT members—Schorer, Bovis, Plowman

and Honner—you state that there are no such lists above the searches, as noted. The searcheswere designed to capture the widest possible range of information, including the informationsought in CoT’s submission, without specific reference to the wording of those submissions.What I am asking you, Mr Levy, is: who gave permission to change the requests—to not referthe specific requests and instead make a broad sweep? Whose decision was it? Was it yourdecision?

Mr Levy —No. All of the search methodologies were developed and submitted to theworking party, which consists of the chair—Mr Wynack—Mrs Garms and Mr Schorer.

Senator BOSWELL—So you are saying Mr Wynack agreed to this?Mr Levy —He was involved in terms of attending many of the searches.Senator BOSWELL—I am not saying he was not at the searches, but did he agree to you

going to a wide ranging search, or did he agree that you should address the specific issuesthat were asked by the CoT cases?

Mr Levy —I believe that in the discussions the wide ranging search approach was consideredby all as the most probable.

Senator BOSWELL—No, I am asking: did Mr Wynack agree for a broad-brush approach,to use your terms?

Mr Benjamin —Senator, in his report—



Senator BOSWELL—Please let me finish this, because I want to ask this question: did MrWynack agree to a broad-brush approach or did he agree that you should pursue the specificquestions asked by the CoT cases?

Mr Levy —I believe he agreed to a broad-brush approach, plus that we certainly take intoaccount any specific questions once they had been adjudicated on by the AMBIDJI group andthey had been reported back.

Senator BOSWELL—So Mr Wynack said, ‘Let’s go for a broad-brush approach and notworry about the specifics’?

Mr Levy —Certainly not. We were after specific information and we felt that the mostappropriate way of getting specific information was to go for everything. That way, we madesure that any specific information would have been caught.

Mr Benjamin —Senator, in his report to the committee in October, Mr Wynack gave us whatcould fairly be described as a clean bill of health. There is no criticism of that that I knowof in his report.

Senator BOSWELL—Who made the decision to go for this wide-ranging sweep? Was itMr Ward? Was it you, Mr Levy? Who made the decision to go for it?

Mr Levy —The decision would have been made via the working party. In terms of theprocedure that was suggested to satisfy all of the concerns of the claimants, we would havedeveloped that and we would have discussed it together and presented it to the working partyas the most viable way of satisfying their needs.

Senator BOSWELL—You are saying that the working party agreed at a meeting to thiswide-ranging search?

Mr Levy —I believe that the procedure we put forward was accepted by the chair as the bestway to proceed.

Senator BOSWELL—So Mr Wynack said, ‘Don’t worry about the specific requests by theCoT members, just go in for a wide-ranging search?

Mr Levy —No, he certainly did not say that.

Senator BOSWELL—But you just said he did! You said he agreed to go for a wide-rangingsearch.

Mr Levy —On the basis that we knew that that would also catch any information that wasrequired to answer the specific questions. He did not say to ignore specific questions.

Mr Benjamin —If there are areas that claimants feel have not been adequately covered, juststate them and we will go back and have a look at those areas to see if anything has beenmissed.

Mr Armstrong —I do not think anyone is suggesting that by this methodology you wouldmiss something. I think what you are saying is, ‘You may have got too much.’ We have takenthe view that it is better to be safe than sorry; we want to put this to bed; we want to get everyconceivable scrap of paper.

Senator BOSWELL—Nobody wants to put it to bed more than I do. It has haunted mefor five years.

Mr Armstrong —Is the suggestion that stuff was not got?

Senator BOSWELL—The suggestion is they are not getting the specific documents.



Mr Armstrong —To the extent that they were ever created and still exist and we have beenable to locate them, we have provided what we can get.

Mr G. Ward —Senator, can I ask a question to clarify the point of issue here because I ama little confused. Is the issue that we have deliberately not sought some areas or that we havesought too much?

Senator BOSWELL—It was Mr Armstrong, at Telstra’s insistence, who asked the CoTmembers to narrow down their requests and become specific. CoT members went to a lot ofeffort and expense to do this. Mrs Garms put in a specific list of requests—which is that one—and she also did for another four members. But then today Mr Levy writes and says in a letterthat there are no such lists. You say these lists did not exist.

Mr Levy —Which lists are you referring to again?

Senator BOSWELL—They are specific lists—

Mr Levy —Of questions?

Senator BOSWELL—Of questions.

Mr Levy —What I am saying is that all of the questions that were put forward by all of theclaimants were taken into account in formulating the search methodology. In the case of MrsGarms, there were some specific questions which were used at the end of the searchprocedures—not earlier—as a final check.

Mr Armstrong —I do not understand Mrs Garms’s complaint to be that those questions werenot used. They were. I understand her complaint to be about the way we transcribed them;words were left out of four or five of the 41 questions. My understanding—Mr Levy willcorrect me if I am wrong—is that the submissions by the parties were taken into account whendeveloping—‘Where are we going to go?’, ‘Who are we going to see?’, ‘What are we goingto ask for?’ What Mr Levy’s letter says, as I recall, is that those lists were not used. I thinkyou made it—

Senator BOSWELL—The exact words you used were, ‘There are no such lists’. I presumethat Telstra has not formulated the lists to ask its smaller divisions.

Mr Levy —Senator, what I referred to there are lists of specific questions for the other fourclaimants. It was felt that that was not necessary because we had encompassed every one oftheir requests in the search methodology that we had put forward.

Senator BOSWELL—What did Mr Wynack agree to? We go out and appoint a workingparty and Mr Wynack chairs it as an independent umpire, so to speak. Did he agree to ignorethe lists that the CoT cases put in and say, ‘Don’t worry about them. They won’t pick upenough. We’ll go for a wider sweep’?

Mr Armstrong —With respect, my understanding is that your premise that the lists wereignored is not right. Those lists were used, as I understand it, in developing the process, themethodology of where to go to—

Senator BOSWELL—Mr Levy, why in your letter have you said there are no such lists?

Mr Levy —Because we did not produce specific lists of questions to be used at the end ofthe search process for those four claimants because they were not necessary. All of thequestions put forward had been covered in the methodology of the search. In terms of whetherMr Wynack approved not putting forward specific questions, that really is an incorrectapproach because in discussions with Mr Wynack and the committee we put forward a



methodology which we felt would satisfy even the most critical person with regards to usfinding information.

Mr Benjamin —Mr Wynack would have had knowledge of this. He was involved in thesearches, at least with Mrs Garms. He put in a report in October which did not offer criticism,as far as I can remember, of that process. If the CoT people are saying that they have sufferedsome disadvantage, there is some area we have missed out, something we have not found, tellus and we will go and look for it if we have not conducted a search in that area. I had adiscussion with Mr Wynack last week. We put a response to Mr Wynack with respect to thequestions that CoT has asked us and I have made an offer to him. If there is any area whichhe feels has not been satisfied at this point of time I am quite happy for him to come in andwork with our groups to finish it off.

Senator BOSWELL—I know that. This always goes on and on and we never get to theend of it. I want to be specific here, too. There were a number of lists put in—here they are—and then you write to us and say, ‘There are no such lists.’ We then ask for your instructionsgoing out to your smaller departments saying, ‘Where are the lists that you have addressedour specific request from?’ You say, ‘There are no such lists; therefore, we have never askedfor them.’

Mr Armstrong —The point is that the instructions were not sent out to the departments tomake sure that this was as thorough as it could be. We avoided just posting out and askingfor a response. People went out and did face-to-face visits. Mr Levy told me this morning that,based on an off-the-cuff count, we visited about 380 sites, or several hundred sites.

Mr Levy —Several hundred.

Mr Armstrong —Several hundred sites and about the same number of staff. There were face-to-face interviews of those people with people from Mr Levy’s group who were familiar withthe submissions, familiar with the whole process, familiar with their claims—the aim beingto sit down and see them face to face. In some cases Mr Levy’s people physically searchedthe places. In some places they reviewed documents offered up.

Mr Benjamin —We believe that every question that was asked in a specific way has beencovered.

Senator BOSWELL—Why did you say, ‘There were no such lists’?

Mr Levy —There are documents called the search methodology and, I think, the searchlocations tables, which laid out all of the areas we were going to visit, who we were goingto visit, why we were going to visit them and the type of data we may recover. These wereprovided to Mr Wynack and to the claimants. A complete set of this documentation wasgenerated for each of the CoTs.

Senator BOSWELL—You say there are no such lists available and I then asked you, ‘Canyou now reply to this specific request?’ I mean, here they are. Can you go through these andreply to them specifically?

Mr Levy —I would like to have a look at that.

Senator BOSWELL—You have the documentation. You have the documentation of all theCoT cases asking for specific lists, asking for specific requests. If you do not have them, ifyou have not proceeded to provide those, I ask the question: will you now provide them?

Mr Levy —I know you are tabling that. We will certainly take that on board and providecomment as you ask.



Mr Armstrong —With respect, my understanding is—and again Mr Levy will correct meif I am wrong—that all of the documents collected in response to these searches were madeavailable for viewing by the different CoT members. They have come in, viewed thedocuments and indicated those that they want copies of and we provided those copies.

Senator BOSWELL—But then Mr Armstrong said—I presume this is what he said—‘Weare not going to sweep search. I want you to be specific. I want you to go down and tell uswhat documents you want.’ That was done in—Mr Armstrong was there.

Mr Armstrong —You have quoted a couple of times about ‘Mr Armstrong’s insistence’.I have not attended a working party meeting for well over a year. I do not recall anythingbeing done at my insistence. I suppose I might have put some proposition or suggestions, butmy recollection of the decision to scale down the request is that it was discussed, it wascanvassed and it was a working party agreement. It may be a moot and pedantic point, butit was certainly canvassed at the working party meetings.

Senator MARK BISHOP—Mr Chairman, I want to draw your attention to the time. Weare now one hour delayed in the agenda. We have been on this point for 30 minutes. It is inthe process of discussion elsewhere. How does it relate to additional estimates?

CHAIR —That is a relevant point, Senator Bishop. We are an hour behind Senator Boswell.Senator BOSWELL—I will take another 10 minutes if that is all right.CHAIR —You did say your questions would be short. The issue of relevance to the estimates

has to be borne in mind. This issue does not have an actual relevance to these estimates.Senator BOSWELL—Just quickly, Mr Levy, because time is running out, you have already

said you would agree to look at these to provide these specific requests.Mr Levy —We will take that on board and reply accordingly.Senator BOSWELL—You had a meeting in August with the working party and requests

were not changed. The specific requests had to be answered. You have already said you willpick that up. I have a list here of Mr Plowman’s documents, Mr Bovas’s and Mrs Garms’sdocuments in relation to Mrs Garms’s requests. I believe only about 12 per cent of thedocuments she has requested have been given. The working party was to be for four months.It has now been going for 16 months. We really need to get to this position fairly quickly.

The CoT members still require the network and Ericsson documents. They have not receivedone Ericsson document. You have written to Mr Wynack and said, ‘If you want the Ericssondocuments, you go to Ericssons and get them.’ Why can you not provide the Ericssondocuments and why have you written a letter to Mr Wynack and said for him to go andapproach Ericssons?

Mr Armstrong —We have spelt out in correspondence the search methodologies, the effortswe have made to locate the Ericsson documents, what our understanding would be of the sortof documents Ericssons create and the documents we would hold. We have provided all thatinformation to the chair and to the CoT members. In the past, we were asked to contact theAustralian Federal Police and the ACA to request documents from them. We did that late lastyear and were roundly criticised by the CoT members for the way the request was scoped.It seems to us that, if we approach an outside body, we will be criticised for somehownobbling or restricting the search. We are perfectly happy for the chair, as an independent thirdparty, to go and make those approaches, so that process is beyond reproach and cannot becriticised. That is why we have suggested Mr Wynack should do that.

Senator BOSWELL—Do you have the Ericsson documents?



Mr Levy —The issue becomes clouded because of the definition of Ericsson documents. Itstarted off that the Ericsson documents pertained to the question of Mrs Garms wanting corres-pondence to and from Ericsson and Telstra pertaining to the Fortitude Valley AXE andTandem exchange relevant to the provision of her service.

Senator BOSWELL—That is right.

Mr Levy —Yes, we have searched for those and we have found nothing that fits thatdefinition, apart from other documents pertaining to service which have already been providedfor viewing and supplied as copies when requested. The point is that the term ‘Ericssondocuments’ has been widened to the point where it means any communications between Telstraand Ericsson. Obviously there are millions of documents that fit that criteria.

Senator BOSWELL—If we get down to Mrs Garms’s request, she has been very specificon what Ericsson documents she wants—very specific. You have said, ‘Go to Ericsson.’Ericsson could quite easily say that it is between her and Telstra. Her requests on Ericssondocuments have been very specific, and I believe she wants the Ericsson documents that relateto the upgrading of the Fortitude Valley exchange. They should not be hard to find. Whenyou go out and upgrade an exchange you must have some form of plan, and that would bethe Ericsson documents if Ericsson are doing the job for you.

Mr Levy —Where such documents exist, we would have found them and provided them.Also, on the subject of Ericsson’s documents per se, we have responded to the chair, andcopies have been given to Mrs Garms. I do not know the date of the letter—I can certainlyfind it out for you—but we have given a full explanation of the results of the search pertainingto the Ericsson documents.

Senator BOSWELL—Are there Ericsson documents on the upgrading of the FortitudeValley exchange?

Mr Levy —There are documents pertaining to the upgrading of the Fortitude Valleyexchange.

Senator BOSWELL—And has Mrs Garms been given those documents?

Mr Levy —Yes.

Mr Benjamin —We are not withholding any documents. The only reason we suggested youmight like to go to Ericsson is that it was suggested at some time that Ericsson might havesome documents. If Ericsson have some documents, we do not know. We have suggested, forreasons that Mr Armstrong put forward before, that we have no objection at all to thechairman’s asking Ericsson if they have any documents. But we are not knowingly withholdingany documents.

CHAIR —Senator Boswell, we have had our extra time. Senator Bishop has said that thismatter is being looked into in another forum, and we cannot resolve it here, so I think weshould wind up at this point.

Senator BOSWELL—In deference to your ruling, Mr Chairman, and because I have suchhigh regard for you I will finish.

CHAIR —I will tell you why Senator Boswell has high regard for me: because my officeis next to his and for his Christmas party he had to use my fridge! That is what this is allabout. We will have a five-minute break while the committee has a private meeting, and wewill resume at half past four.

Proceedings suspended from 4.23 p.m. to 4.32 p.m.



CHAIR —I call the committee to order. We will move on to subprogram 4.2—AustralianPostal Corporation.

Senator MARK BISHOP—I have one further question of Telstra.CHAIR —I am sorry. You were the one who called our attention to the fact that we were

an hour late and I just assumed you would want us to get on as quickly as possible.Senator MARK BISHOP—I have a question arising out of the Katherine floods business.

The footage provided by the ABC, we all know now, was incorrect. Have you taken stepsinternally to make sure that that issue does not come up again and mistakes do not occuragain?

Mr Frueh —Yes, we certainly have.Senator MARK BISHOP—Could you tell us what you have done?Mr Frueh —Yes. Obviously this is a matter of major concern for the company. A lot of it

has been subject to fairly close press scrutiny of the actions we have taken. Without goingright back to the actual events, I guess you are after the remedial actions to prevent itoccurring again, as distinct from the actions we took in the actual case to mitigate the impact.

In regard to preventing this thing occurring again, this has caused more or less a totalindustry review about the nature and usage of footage in the creation of a number of ads—ithas emerged as an industry issue, if you like. In particular, our ad agency that was involvedin this, Mojo, and Telstra have referred it to the industry body, the Australian Federation ofAdvertisers, and to their ethics committee in particular. This committee is looking at changingthe code of ethics that applies in the use of public footage in advertising. There is a closedseminar that will be held in the near future to examine how these areas could be tightened up.That is within the whole industry.

In its own procedures, internally and with our agencies, Telstra has fully reviewed those andhas put in extra steps to ensure that we obtain releases from any parties that are going to beinvolved in any advertising. We will check all of those due diligence issues on the waythrough in future. So it has had very serious focus within the company.

Senator MARK BISHOP—You are satisfied that this type of mistake will not occur again?Mr Frueh —We will be doing absolutely everything to ensure that it does not happen again.

Of course, we regret the impact that it did have on people, but we have tried to take aresponsible approach in remediating the situation at every step on the way through. I havesome details that I could perhaps discuss with the senator off line, if need be.

Senator MARK BISHOP—Thank you. That is all I have for Telstra.Senator LUNDY—I will take the opportunity to place three questions on notice relating

to matters I raised earlier.CHAIR —We will now move to subprogram 4.2, so I call the Australian Postal Corporation

to the table. Just for the information of officers, we are going to proceed as quickly as we canthrough subprograms 4.2, 4.4 and 4.1. Then we are going to call 3.2, the NTA, and then goto 3.1.[4.35 p.m.]

Subprogram 4.2—Australian Postal Corporation

Senator MARK BISHOP—Mr Ryan, the Minister, Senator Alston, put out a press releaseon 13 July last year, No. 144 of 1998, relating to the service charter with Australia Post andgoing to numbers of post offices. We were told there were currently 4,481 postal outlets in



Australia, with 2,580 in rural and remote areas. In 1998, the government negotiated a servicecharter with Australia Post which guaranteed a minimum of 4,000 postal outlets, including2,500 in rural Australia. The implication from those simple figures is that something in theorder of 481 postal outlets, including 80 in rural and remote areas, may close.

I have a series of questions. Firstly, on staffing levels, at the end of 1998 how many staffwere employed by Australia Post? How many were employed at the end of each of the pastfive years, back to 1993? What was the rate of staff reduction over that same period? DoesAustralia Post have a forward plan with respect to employment levels, and have they risen,fallen or remained much the same? I think most of that will have to be taken on notice.

In terms of the closures issue, how many postal outlets are there around Australia at themoment and how many of those are in regional Australia?

Mr Ryan —Senator, we will need to respond to some of those questions on notice. But Iwould refer you to our last annual report, where we do have a five-year statistical summary,included in which is an indication of full-time employment. In other sections of the statisticalreport, we do indicate part-time and contractor numbers over a five-year term. So it will bequite easy to get that information.

Senator MARK BISHOP—You will be able to provide that information to me in arelatively concise form?

Mr Ryan —Yes. Similarly, the number of outlets are part of the five-year statisticalsummary, and our annual report does have a split between rural and remote. I am not surewhether the employment numbers are split in that way—that might require a little extra work.But we can provide that information quite readily for you.

Senator MARK BISHOP—Thank you, Mr Ryan. Can you tell me now how many postaloutlets there are across Australia and how many of those are in regional Australia?

Mr Talbot —There were 4,481 at the end of June 1998. Of those, 1,901 were in themetropolitan area, 2,083 were in rural and another 497 were in remote, bringing the total to4,481 at the end of that period.

Senator MARK BISHOP—Do you have the figures, on the same break-up basis, for howmany postal outlets there were at the end of 1995?

Mr Talbot —I do not believe I have them available immediately.

Senator MARK BISHOP—Okay. Can you take that on notice, and provide that informationfor me, in the same form as you have just done there, updating the June 1998 figures toDecember 1998?

Mr Talbot —Sure.

Mr Ryan —Senator, I could respond on one point. You did indicate that the numberscontained in the minister’s press release might imply that some hundreds of post offices couldbe closed and that we would still be within the ambit of our charter. I can assure you that thisis not our intention. I believe the figures you have asked for will demonstrate that the reverseis happening: that the number of outlets has probably grown somewhat since June of last year.

Also, when the government was taking its decisions on the National Competition Council,part of its considerations led to whether decisions would in any way impact adversely on ruraland remote Australia. Again, we gave an undertaking to the government that no retail outletswould close as a result of the government’s decision on the National Competition Council.



I would like to dispel any suggestion that we are in the game of reducing access to postalservices. We are not.

Senator MARK BISHOP—Fine; thank you. So you reject the simple maths I did, thatsomething in the order of 481 outlets would close in the short to medium term.

Mr Ryan —Absolutely.

Senator MARK BISHOP—And the same with respect to the 80 regional outlets? You rejectthe proposition that they will be closed as well?

Mr Ryan —That is correct. We have no intention of doing that. I have always added onequalification: there may be some very small locations where we have a licensed post officethat may be in the only combined business in a very small town. Occasionally, that businesswill say,‘We really cannot make any money out of postal services or out of our generalbusiness,’ and they may leave. We then search for someone else who will take a licence. Insome cases it is just not possible to find anyone who is prepared to take a licence. It is in thevery bottom end of the very small towns where that might inevitably happen, in which casewe try to introduce a community postal agency, which still provides basic services but not therange that would normally be provided through a licensed outlet.

Senator MARK BISHOP—If you are considering closure of a post office, does thecorporation have a formal set of guidelines or review procedures that it follows?

Mr Ryan —Yes, we do. Mr Talbot is the group manager of Retail, and he might like toaddress that point.

Senator MARK BISHOP—You might take that on notice and provide those guidelines orreview procedures to the committee.

Mr Ryan —Certainly.

Senator MARK BISHOP—There are reports that the mail centre in Goulburn, whichservices the Southern Highlands region, will close. Can you confirm these reports?

Mr Ryan —We have had discussions with the local member and with representatives of theGoulburn City Council. In the course of those discussions, we did explain that the mail centrewould be affected as a result of a project called FuturePOST, which involves the modernisationof our sorting technology and the introduction of major centres in Sydney and Melbourne.Those centres will allow us to sort mail at the first pass, rather than double-handle the mailin more remote centres, and that will lead to some job savings.

Most of the job savings will be in capital cities but some will be in regional Australia, andGoulburn will be affected. We have indicated that 12 positions could go by July of this year,and possibly another 10 or so in the next 18 months—depending upon the take-up of the barcoding of mail, because bar coding of mail will enable us to use this technology mostefficiently.

We have discussions with staff about that. A large number of the staff want some certainty.They have said, ‘What is our future? If the centre is to be reduced, we would like to relocateor we would like to take a voluntary early retirement package.’ And we have acceded to that,and we are trying to relocate, from memory, around 10 staff who have indicated they wouldlike to go to Canberra or to Wagga and another 10 to 12 staff who have indicated they wouldlike the package at some point.

We have explained that to representatives from Goulburn. They have asked us to considerwhether there are other things we can do to assist the mail centre—whether Goulburn can be



used as a backup to the Canberra mail centre because of its particular location—proximity tothe Hume Highway, et cetera. They have asked us if we can look at slowing the reduction instaff and they have asked us to look at whether new technology two or three years out mightenable us to remote some functions that might be done in a capital city to a regional centre.We have undertaken to examine each of those options and come back to them shortly.

As to whether we are closing the mail centre, no we are not, but we are significantlyreducing it in size and we are changing its operation to what is known as a hub operation. Sothere will be basically parcel processing, and parcel and letter delivery, left at Goulburn at theend of this process.

Senator MARK BISHOP—Thank you for that. Do you have any other scheduled closuresof either postal outlets or mail centres on the agenda at the moment?

Mr Ryan —Certainly, as I mentioned before, there will be some reductions as a result ofthe introduction of FuturePOST over the next 18 months or so. That will be about 2,000 jobsthat will be affected, about 1,700 of which will be in capital cities, with 300 in rural andregional Australia. That will mean that a number of outlying mail centres that are currentlyin rural areas will be reviewed, and they may be reduced in the scope of their operation. Therewill certainly be some mail centres in capital cities that will be closed and absorbed into largermail centres that are being constructed at present.

Senator MARK BISHOP—Which capital cities?Mr Ryan —Melbourne and Sydney. Mr Slight is the project director for the FuturePOST

project and could expand on that if you wish.Mr Slight —Over the next couple of years there will be a series of closures, both in Sydney

and Melbourne. As I think you are aware, we are rationalising our network in both of thosecities and providing a major new plant in both of those cities. The idea is to close some ofthe smaller plants and put them into these major plants.

Senator MARK BISHOP—Are you revisiting the old centralisation strategy of the early1970s?

Mr Slight —Certainly not Redfern if that is what you are alluding to. It is certainly true thatwe are centralising the operations, but not in the same way as Redfern was.

Senator MARK BISHOP—Obviously it would have the same consequences.Mr Slight —I was around when Redfern was there.Senator MARK BISHOP—What will be the consequences, in terms of employment, of

these rationalisations in Melbourne and Sydney in the big centres?Mr Slight —Mr Ryan has indicated that overall we would expect there to be about 2,000

staff reduction across the nation. Some 1,700 of those would be in the metropolitan area andapproximately half in Sydney and Melbourne.

Senator MARK BISHOP—And the other 800-odd in—Mr Slight —I beg your pardon. The majority of those 1,700 will be in Sydney and

Melbourne, with relatively few being impacted in Brisbane, Adelaide and Perth.Senator MARK BISHOP—And I presume you are going through the routine negotiations

with the relevant trade unions.Mr Slight —We certainly are.CHAIR —Any more questions, Senator?



Senator MARK BISHOP—Not on that topic, but on postage fraud. Are you familiar withthe descriptions of short lodging, discount skimming, line hauling and advertising maildiscounts in the area of customer fraud via mail houses within the mail delivery industry?

Mr Ryan —I am broadly familiar with some of those terms—and certainly mail revenueprotection, as we call it, at mail centres is a very important part of our security operations,and indeed our mail centre manager operations.

Senator MARK BISHOP—Do you have in place security procedures to make sure thatthese practices do not occur in your mail centres?

Mr Ryan —We certainly have procedures in place to minimise the prospect of that occurring.I am not sure that any system can be absolutely perfect.

Senator MARK BISHOP—Do you regard the potential for customer fraud of thecorporation—obviously you regard it as serious—as a matter of significant financialconsequence?

Mr Ryan —It has been identified years ago obviously as an area of potential commercialrisk, as a result of which quite a deal of work has been put in by our security and operationalstaff and support administrative staff to devise systems to check the accuracy of lodgmentsthat are made with us. So it is certainly an issue that attracts an appropriate amount ofattention. That is not to say that we cannot improve in these areas, and our security area andoperations area are particularly keen to do that. I do not know if Mr Slight, given hisexperience, might like to add something.

Mr Slight —I would like to add a couple of points. In fact, some of the FuturePOST project,given the technologies that sit around that, will enable us to do even more in this area. Itcertainly is a risk area; we are well aware of it and we do have processes and procedures inplace at all our facilities and they are regularly reviewed. It is clearly an area that we do keepa very close eye on.

Senator MARK BISHOP—On an ongoing basis?

Mr Slight —It is some couple of years since I have been in the operations area, but I wasthere for about 10 years, managing the whole of New South Wales mails, and certainly duringthat period that was the case.

Senator MARK BISHOP—Who can advise me on the last couple of years?

Mr Ryan —I think from an operational or security perspective if you want detailedinformation we would not be able to do that. I am aware that there have been some recentconcerns involving some major suppliers, and that is the subject of investigation.

Senator MARK BISHOP—That is the subject of current investigation, is it?

Mr Ryan —Yes.

Senator MARK BISHOP—When do you think that will be concluded?

Mr Ryan —I really cannot be sure of that. The investigation, as I understand it, is not solelybeing conducted by Australia Post.

Senator MARK BISHOP—I see; it is probably best pursued elsewhere then. Is staff fraudor staff complicity in fraud a serious issue within Australia Post?

Mr Ryan —I am certainly unaware of any significant disciplinary cases that have dealt withthat issue—if you are talking about lodgment of mail as distinct from other activities.



Senator MARK BISHOP—Short lodging, unlodged mail, topping up, advertising maildiscount, print post—there is a range.

Mr Ryan —No, I am unaware of any significant problem in that area, and I think, to be fair,the bulk of our staff are very honest and hardworking. In a large business there mayoccasionally be one or two who are not, but—

Senator MARK BISHOP—There is no doubt in my mind that 99 per cent of your staffare completely honest and legitimate, but it has just been brought to my attention that thereis a range of potential rorts going on in Australia Post. I am not going to name names in apublic hearing like this but I am asking you whether the corporation has this issue underongoing review.

Mr Ryan —We certainly do, and, as I mentioned, there is a specific matter that is currentlyunder active investigation. Might I suggest that if there are matters you wish to take up withPost you could do that through me or directly with the head of our security.

Senator MARK BISHOP—Going back to the first issue, that of potential consumer fraudby possibly large mailing organisations—and you said that was under review and there wasan investigation going on as well—have you carried out any internal investigation to determinethe extent of possible fraud?

Mr Ryan —I am aware that, I think within the last 18 months, our internal audit team havereviewed our revenue protection procedures at receiving mail centres, so to that extent thereis—

Senator MARK BISHOP—Does that cover this issue?

Mr Ryan —By ‘this issue’, do you mean generally the issue of potential for fraud?


Mr Ryan —Yes, it would have.

Senator MARK BISHOP—Under-lodgment, over-lodgment, skimming—all of those things.

Mr Ryan —Yes. I believe—I really cannot be all that accurate on timing. My recollectionis that it might have been within the last 18 months that such a study was undertaken. Butin relation to our security area, of course, one of its responsibilities is to monitor theeffectiveness of our mail revenue protection measures. I would expect that would be goingon but I am not in a position to be specific about it.

Senator MARK BISHOP—Has ANAO been invited at all to review those internal auditsor the internal protections?

Mr Ryan —I am simply unaware of that. I can certainly check that for you.

Senator MARK BISHOP—Turning now to the issue of hold-ups, in New South Wales in1994 there were 14 armed hold-ups of post offices, in 1995 42 armed hold-ups, in 1996 downa bit to 30, in 1997 115 armed hold-ups, and until May of 1998 59 hold-ups. So the trend lineis going the wrong way. That information, by the way, has been provided to me by theCEPU—a copy of correspondence to the minister, and I think to you as well.

Mr Ryan —Yes.

Senator MARK BISHOP—Is that occurring in all the other states as well—this trend lineof armed hold-ups in post offices?

Mr Ryan —I do not believe so, but Mr Talbot might be able to elaborate.



Mr Talbot —In other states there is not. We have had some difficulties in Western Australiajust in the last 12 months, but primarily the armed hold-ups have been occurring in and aroundthe Sydney metropolitan area. They are consistent, unfortunately, with the number of armedhold-ups that are occurring in that area generally in relation to a lot of small businesses,service stations and chemists, and Post has been working closely with the New South Walespolice to attempt to bring some order back into securing our post offices so our customers andstaff are not subjected to these attacks. Compared to chemists, newsagents, petrol stations andthe like, the security discipline in Post is quite good: although the number in total has goneup, compared to those other places they are quite low.

Senator MARK BISHOP—Which number is quite low?

Mr Talbot —The number of attacks on post offices—hold-ups of post offices—althoughit has increased, has increased at a lower rate compared with hold-ups against other merchantsin the Sydney metropolitan area over the last 12 months or so.

Senator MARK BISHOP—So fewer post offices are being attacked than other retail outletsin the Sydney metropolitan area.

Mr Talbot —Yes. I guess the point I am making is that this is a condition associated withsecurity in the Sydney metropolitan area generally, not just in relation to post offices.

Senator MARK BISHOP—Are you taking any of the steps that other large cash holdingorganisations like banks are taking in terms of pop-up screens, armed guards or security guardsconstantly on your premises? Is that under consideration?

Mr Ryan —We did take some advice on those sorts of steps from a consultancy group whosuggested to us that they were not as effective as might be thought on first blush—and indeedcould expose customers and/or staff to greater risk, particularly the pop-up screens. I can tellyou what we have done in response to the situation we had in New South Wales if that willassist.

Senator MARK BISHOP—If you don’t mind, yes.

Mr Ryan —There have been a number of measures. We have had an external review of ourcrime prevention and protective security measures, and a copy of that report has been providedto the CEPU. We are doing revised threat assessments on all of our outlets—those outlets thatclearly are open to greater risk than others. We are increasing our security awareness trainingof our staff. We are introducing a predictive modelling analytical system to try and identifythose higher risk outlets. We are trialling new cash dispensers. We are trialling anti-jumpcounter barriers. Mind you, we did use those, I think, in Waterloo and they were notparticularly successful. We are trialling some new counter configurations so that the accessto cash is made more difficult. And we are reviewing our cash management plans and the wayin which we move cash from outlets to other secure areas. The other thing we did was makestrong representations to the New South Wales Commissioner of Police, as a result of whicha small task force was set up to be responsible for trying to break what was occurring inrobberies in post offices.

Senator MARK BISHOP—Is it organised gangs or ad hoc?

Mr Ryan —I understand that two people have been arrested as a result of that initiative andthe police believe that they were responsible for a large proportion of the robberies that hadbeen taking place. We have also set up a joint working party with an outside consultancy firmand the CEPU to determine any further actions that may be merited.



Senator MARK BISHOP—So you have a joint working party to consider implementationof further actions with the CEPU.

Mr Ryan —To consider whether any further actions are warranted.Senator MARK BISHOP—I presume the CEPU is going to pursue this issue of some form

of permanent guards in the post offices.Mr Ryan —They may well do that. I am unaware of their intentions in that area.Senator MARK BISHOP—The tone of their letters to date suggests that they are interested

in that solution.CHAIR —How are we going, Senator Bishop?Senator MARK BISHOP—We have one further issue with Australia Post. Can you just

outline for the committee what the internal disciplinary procedures are when a line employeeapparently breaches discipline?

Mr Ryan —I will do so in the broad, and then one of my colleagues may want to elaborate.We do have a code of employee conduct where an employee is suspected of having actedimproperly. That may be referred to an investigation officer who reports to a more seniormanager with a recommendation as to what action might be taken. Included in that report,obviously, are the results of interviews conducted with staff and/or other managers who maybe involved. The investigation officer will then report to the senior manager and a decisionwould be taken as to the form of action that might be taken against that employee, rangingfrom a warning through to dismissal.

Senator MARK BISHOP—So that is the first step.Mr Ryan —That is the first step. There is a review mechanism that staff have access to in

the event that they are dissatisfied with the outcome.Senator MARK BISHOP—Is the review mechanism an appeal mechanism or a review at

first instance?Mr Ryan —I would regard it as an appeal mechanism.Senator MARK BISHOP—An appeal mechanism.Mr Ryan —Yes.Senator MARK BISHOP—So, if an employee is aggrieved about a decision by the senior

manager, he can institute appeal proceedings?Mr Ryan —Yes.Senator MARK BISHOP—What sort of body or committee looks after that appeal

proceedings?Mr Ryan —It is an independent review board of reference. I think the people placed on that

usually have either industrial experience or other relevant experience, including in acommission that they can bring to bear.

Senator MARK BISHOP—Is there a permanent board of reference or is it created on anad hoc basis?

Mr Ryan —I think there are a number of people who can act as a board of reference whenrequired.

Senator MARK BISHOP—And they are nominated by whom?Mr Ryan —Mr Slight might be able to help you there.



Mr Slight —Generally they are nominated. It is a circumstance that only comes around fromtime to time because there are a limited number.

Senator MARK BISHOP—Is there a union nominated person and a management nominatedperson and an independent chair?

Mr Slight —No. There is an independent chair who is usually appointed in consultation withmanagement and the union. The board of reference then generally consists of the chair, plusa management representative, and the staff is normally represented by a union representative.

Senator MARK BISHOP—A union rep, management rep and an independent chair jointlyagreed by the parties.

Mr Slight —Yes. That chair is, in effect, a permanent individual and sits for a considerableperiod of time.

Senator MARK BISHOP—Who is the current independent chair?Mr Slight —There is a former union person in New South Wales, Ken Davies.Senator MARK BISHOP—And he is the current independent chair?Mr Slight —He is one of two or three of these people.Senator MARK BISHOP—Do you know who the other two or three are?Mr Slight —Not off the cuff, sorry.Senator MARK BISHOP—Could you provide us with their names?Mr Slight —Yes.Senator MARK BISHOP—So we have got to stage 2 of this tripartite review procedure.

Is that body formally constituted under an award?Mr Slight —Yes.Senator MARK BISHOP—It is created under a registered award. Is there a third step now?Mr Ryan —I believe they can go to the Industrial Relations Commission.Senator MARK BISHOP—And they would have that right anyway?Mr Ryan —Yes.Senator MARK BISHOP—Do you have a legal adviser employed by Australia Post in New

South Wales by the name of Mr Brotherson?Mr Ryan —Yes, we do.Senator MARK BISHOP—What is his formal position?Mr Ryan —He is the legal adviser in our New South Wales management area.Senator MARK BISHOP—You are familiar with a person by the name of Mr Dennis

Sutton?Mr Ryan —Yes, I am.Senator MARK BISHOP—I am advised that Mr Brotherson summoned Mr Sutton—giving

something less than 24 hours notice—to a formal meeting in the offices of a solicitor in a largeSydney law firm. Mr Sutton attended the law firm as directed on or around Wednesday, 18November. He was directed to the office of a particular solicitor in a law firm. They thenattended a meeting where Mr Sutton was the subject of significant questions arising out ofallegations of misperformance of duty, or not carrying out correct duties. That meeting waschaired by a Mr Ellicott. Are you familiar with this set of circumstances?



Mr Ryan —Yes, I am broadly familiar with them.Senator MARK BISHOP—Is that Mr Ellicott QC?Mr Ryan —That is correct.Senator MARK BISHOP—Former member of parliament and minister of the Crown?Mr Ryan —That is correct.Senator MARK BISHOP—Who was then, from memory, appointed as a judge of the

Federal Court?Mr Ryan —I am unaware of that. That is the individual. It is Mr Ellicott QC.Senator MARK BISHOP—We know what we are talking about. Mr Sutton was directed

to attend this meeting and subject to some form of examination by persons in attendance,including Mr Ellicott. Is this a formal part of the disciplinary procedures that we have beendiscussing for the last 15 minutes?

Mr Ryan —It is not a normal part, no.Senator MARK BISHOP—Is it a formal part of those proceedings?Mr Ryan —No, this was something else that we were asked to consider and we agreed to

have done.Senator MARK BISHOP—Who asked you to consider it?Mr Ryan —The minister.Senator MARK BISHOP—The minister?Mr Ryan —Yes.Senator MARK BISHOP—Minister Alston?Mr Ryan —Yes, that is correct.Senator MARK BISHOP—He asked you verbally or in writing?Mr Ryan —In writing.Senator MARK BISHOP—Can we have a copy of that correspondence?Mr Ryan —It is not my letter, so I do not think I am in a position to provide it.Senator MARK BISHOP—You are in receipt of it, aren’t you?Mr Ryan —I am the receiver, but I am not the author.Senator MARK BISHOP—Perhaps you might outline the circumstances of the receipt of

that correspondence from the minister and your actions subsequent to that.Mr Ryan —I understand that the minister received representations on behalf of one of our

employees who had been the subject of disciplinary proceedings.Senator MARK BISHOP—Who was that employee?Mr Ryan —I know his name, but I am not sure that it adds a lot of substance to our

discussion. He may prefer not to have his name publicly bandied around.Senator MARK BISHOP—I think his name is critical in this discussion.Mr Ryan —I think the employee concerned may feel that this matter is not one where he

would want to have his name publicly bandied about.Senator MARK BISHOP—This employee wrote to a minister of the Crown raising political

considerations, as I understand it, and requesting an investigation. The minister directed



Australia Post to use the services of a former minister of the Crown to do an inquiry whichyou have said is atypical of normal disciplinary procedures.

Mr Ryan —No, there are several claims there that are quite incorrect. If I could answer yourearlier question we can get some clarity. As I understand it, the minister did haverepresentations on behalf of an employee who had action taken against him under our codeof conduct for engaging in what we call hanging out. This is where, for example, postaldelivery officers, having completed their round, do not return to the delivery centre but doother activities or whatever. They return, then they get overtime and a meal allowance.

Senator MARK BISHOP—That is right.Mr Ryan —It is a practice that we are trying to stamp out and we make no apology for that.Senator MARK BISHOP—I used to be a postman in another life.Mr Ryan —I am sure you only know of it by hearsay.Senator MARK BISHOP—Yes.Mr Ryan —So the representations were made and the minister did write to us. He outlined

some concerns he had about the penalty. He outlined some doubts he had about whether thecharges had been fully substantiated and he pointed to some discrepancies in the statementsof witnesses upon whom we had relied in taking the action that we did.

He did not direct us to conduct a further inquiry. He asked us to consider one and we didthat. We decided in these particular circumstances to go ahead with an inquiry. We could seethat the minister had strong concerns. They were quite detailed. For our part we thought,however, that the process that we had gone through had been proper, and, whilst there weresome discrepancies, we did not think they were such that they were likely to see a change inthe outcome.

We thought we had nothing to hide, so we went to a legal firm. He certainly asked us tohave an independent review. We went to a legal with whom we do not normally do business.We gave them a brief on the matter. We asked them to select a person to conduct the review.

They came back to us with two people, I think. Mr Ellicott QC at that point was available.I think he is well regarded, and we concurred with their suggestion that Mr Ellicott was oneof two people that could be used. Then Mr Ellicott proceeded to commence his inquiry andhe started by interviewing two managers, including Mr Sutton who had been involved in theidentification of this other person engaging in hanging-out activity.

We did have some concerns about the way in which our managers were handled in thecourse of the initial part of the inquiry. We conveyed our concerns through the legal firm aboutwhat we wanted done to remedy that and we have had remedies agreed to. The inquiry willbe recommencing shortly. I believe it is subject to Mr Ellicott’s availability.

Senator MARK BISHOP—Will the inquiry recommence ab initio, that is, from thebeginning?

Mr Ryan —No. We asked to be given an opportunity to comment on all of the transcript,including the evidence of other parties involved, and we asked for an opportunity to put issuesthat might be raised with them. Both of those steps were agreed. We have proposed that othersbe interviewed so that a wider appreciation of the basis for our decisions can be obtained byMr Ellicott and that has been agreed.

Senator MARK BISHOP—Back in the times when I was a postman, the allegation ofhanging out was—and I will not say it was common—around all of the time, particularly about



2 p.m. or 2.20 p.m. from memory. It was a fairly routine complaint. It does not surprise methat it is still occurring. Roughly how many post offices employ postmen around Australia?Is it a couple of thousand?

Mr Talbot —We have, in fact, moved a lot of our delivery staff out of post offices andconsolidated them into delivery centres.

Senator MARK BISHOP—How many delivery units have you got that employ postmen?Mr Talbot —Several hundred.Mr Ryan —There are 246.Senator MARK BISHOP—And I suspect that hanging out is fairly common across the

board. I would also imagine that your normal disciplinary procedures, the two-stage process,would be used to keep the lid on potential abuse. Is that the case?

Mr Slight —That has been the case in my experience.Senator MARK BISHOP—How many of these hanging-out complaints do you get on an

annual basis?Mr Ryan —I think in the last year or so—and I cannot be absolutely certain of the number—

around 20 postal delivery officers have been disciplined in New South Wales for hanging out.Senator MARK BISHOP—So probably something in the order of 70 or 80 around

Australia.Mr Ryan —That is my information, yes.Senator MARK BISHOP—That is based on the population conversion. Let us stay with

the 20 in New South Wales. About 20 have been disciplined and they have admitted their guiltat the outset or gone through the procedures, haven’t they?

Mr Ryan —Yes.Senator MARK BISHOP—How many of those have been referred off to independent

investigations chaired by QCs?Mr Ryan —None that I am aware of.Senator MARK BISHOP—What about the year before?Mr Ryan —As I said, none that I am aware of.Senator MARK BISHOP—So none, period.Mr Ryan —None that I am aware of.Senator MARK BISHOP—So this is a fairly significant development occurring with Mr

Sutton and this unnamed employee, is it not?Mr Ryan —It is certainly different from the norm.Senator MARK BISHOP—The norm is none in your time with Australia Post?Mr Ryan —It is none, to my knowledge.Senator MARK BISHOP—Is anyone able to help Mr Ryan out there with additional

knowledge that he is not aware of?Mr Talbot —It would be unusual. I cannot tell you anything different.Senator MARK BISHOP—Not only is it unusual, it is an absolute aberration. It is the first

time it has occurred in living memory, is it not?Mr Slight —I am not aware of any other occasion.



Senator MARK BISHOP—Mr Slight is not aware of any other occasion. Mr Talbot, areyou aware of any other occasion?

Mr Talbot —Not at all.Senator MARK BISHOP—I will not ask Mr Stevens. So it is the first time in living

memory and it arises out of a request by Minister Alston for the review to be made. Do youthink there is any complaint that Mr Sutton might hold to the process to date?

Mr Ryan —Yes. Mr Sutton was quite concerned about the manner in which his exposureto the review was handled.

Senator MARK BISHOP—I bet he was.Mr Ryan —I have met him and explained what occurred, why it occurred and the action

we have taken to seek to remedy that for the rest of the review.Senator MARK BISHOP—Are you negotiating compensation with Mr Sutton?Mr Ryan —No, we are not; nor am I aware of any claim for compensation.Senator MARK BISHOP—Was this person—this unnamed employee—who wrote to the

minister a member of the Liberal Party?Mr Ryan —I have no idea. As far as we were concerned that is irrelevant.Senator MARK BISHOP—Has he been involved in reform groups in the New South Wales

Postal Workers Union?Mr Ryan —I am actually unsure about who precisely wrote to the minister, whether it was

our employee or a representative of our employee.Senator MARK BISHOP—The unnamed employee is the person we are talking about. You

know who that is, don’t you?Mr Ryan —I think both of those people I referred to are in fact employees.Senator MARK BISHOP—You know who they are and I know who they are. Has the

particular person been involved in reform groups in the New South Wales Postal WorkersUnion and elections arising out of that union activity?

Mr Ryan —I believe one of those two people has been, but that was irrelevant to ourdecision to go ahead with the review.

Senator MARK BISHOP—That was irrelevant to your decision?Mr Ryan —Yes.Senator MARK BISHOP—Do you think it was irrelevant to Minister Alston’s decision?Mr Ryan —There was no suggestion in Minister Alston’s correspondence that that person’s

involvement in those activities in any way influenced his correspondence to us. Hiscorrespondence dealt with the facts as had been presented to him and some concerns he hadas a result of those facts.

Senator MARK BISHOP—Coming back to Mr Sutton, who is now going to be havinga new review procedure, the complaint by this unnamed employee really arises out of MrSutton having done his supervisory duties in a proper manner, doesn’t it?

Mr Ryan —We believe that both the managers involved in this case acted properly andfairly, that their evidence was given honestly and that they were not mistaken in the evidencethat they gave. However, there were some inconsistencies between the statements of the twomanagers, and I believe that that has been an issue that has concerned others.



Senator MARK BISHOP—Who is going to be paying the costs of Mr Ellicott QC and ofany support staff?

Mr Ryan —The corporation will be paying those costs because the corporation sought thereview.

Senator MARK BISHOP—What is the consultancy fee for this job?Mr Ryan —There is no consultancy fee per se. It will presumably be a charge based upon

the amount of time taken, as it would be if any other legal consultancy was sought.Senator MARK BISHOP—Have you negotiated a rate with Mr Ellicott?Mr Ryan —I have not personally, no.Senator MARK BISHOP—Has an officer of the corporation negotiated a rate with Mr

Ellicott?Mr Ryan —I have to say that I am unaware of that, but—Senator MARK BISHOP—You have not given him an open-ended right to give you bills,

have you?Mr Ryan —Of course not; but we want a review that is thorough and a fair outcome from

that review.Senator MARK BISHOP—Of course you do. But senior counsel charge in New South

Wales somewhere between $3,000 and $11,000 a day for routine legal work. You know thatand I know that. Presumably they are the rates that Mr Ellicott will be charging you.

Mr Ryan —He could well be somewhere within that range, yes.Senator MARK BISHOP—How long has Mr Ellicott spent to date on this review?Mr Ryan —I think less than a day in interviewing four people. We have suggested that an

inspection occurs at the place where these sightings were made and that three others beinterviewed. I would not expect that to be more than a day and a half. But, as you indicatedbefore, it is a matter for Mr Ellicott.

Senator MARK BISHOP—It appears likely to be two or three days work. But you aresatisfied, from your internal reviews to date, that Mr Sutton and the other person have behavedproperly, even though there are some inconsistencies in their evidence.

Mr Ryan —With considerable integrity under somewhat difficult circumstances, yes.Senator MARK BISHOP—Have you advised the minister’s office of that?Mr Ryan —No; not in those terms. What we said to the minister was that we would advise

him of the outcome of the review. We will be doing that in due course.Senator MARK BISHOP—What I am having trouble coming to terms with is that Mr

Sutton has done a fairly routine disciplinary investigation, and he has come up with a verdictwhich has aggrieved this unnamed employee. In the fullness of time, this unnamed employeehas made a fairly vigorous complaint to the minister, and the minister has written to thecorporation requesting an investigation. An independent law firm has been retained. They havenominated the names of two very senior and respected persons. You have indicated satisfactionwith their recommendations. They have chosen Mr Ellicott—

Mr Ryan —With our concurrence, yes.

Senator MARK BISHOP—With your concurrence. There has been some concern aboutthe review procedure to date. Accordingly, Mr Ellicott is going to do it again. Meanwhile, you



have done your own internal investigations, as I would expect, to get the veracity of this wholeexercise. Arising out of that, you advise me that Mr Sutton has behaved with integrity underdifficult circumstances.

I know that this unnamed person has been active against the administration of the PostalWorkers Union for many years. I know that he is a member of a group that is organising adissident element within your organisation. We all know that he has been an active memberof the Liberal Party and that he has had access to their resources. I will apologise up-frontif I am wrong, but my conclusion is that we have political intervention by the minister whois protecting or advancing the interests of a political colleague. The minister is coming in now;he can answer the questions.

CHAIR —We have been on this program for an hour. It was scheduled to finish at 3.45 p.m.;we are a long way behind.

Senator MARK BISHOP—I take your point, but the minister is here, and he has come infor a reason. He wants to respond to the allegations—they are fairly serious. I take it you dowant to respond, Minister?

Senator Alston—I have to make a confession: I have not been following what has beendiscussed recently because I have been in a meeting with one of my colleagues. So I amunaware of the issues.

Senator MARK BISHOP—The discussion we are having with Mr Ryan arises out of theDennis Sutton matter, where a colleague of his wrote to you, making a series of allegationsthat he had been treated improperly. You wrote to the corporation, presumably attaching a copyof the complainant’s complaint. The corporation retained an independent legal firm in Sydney.The legal firm, with the concurrence of the corporation, has retained Mr Ellicott to do a reviewof these proceedings. Mr Ellicott’s history we are all familiar with.M e a n w h i l e , t h ecorporation has done an internal review of the complaints that you made. It is satisfied thatMr Sutton, the subject of the complaint, has behaved, as Mr Ryan described him ‘with integrityunder difficult circumstances’, notwithstanding some inconsistencies on the evidence on thepart of the two managers. I just put to Mr Ryan that it appeared to me that there had beenpolitical intervention to protect or advance the interests of a longstanding member of theLiberal Party who had been engaged in reform activities over a long period of time with theNew South Wales Postal Workers Union, and that was really the root cause of all of this. Thatis a brief summary of the facts. I invite you now to tell me that my information is wrong orthat I am going down the wrong path.

Mr Ryan —Senator, in fairness, given that the minister was not here, I did make it clearearlier that the minister’s representation to us was based entirely on the facts of this case.


Mr Ryan —There was no reference at all or inference of the sort that you have been makingabout another individual who had connections of a political nature. It dealt purely with thiscase.


Senator Alston—My recollection is somewhat hazy but, as I remember it, we were askedto consider all of the evidence, given that the matter had been dealt with by some AustraliaPost tribunal. I forget the precise nature of it. I—and my office—had a look at the allegationsand the evidence and generally tried to get a sense of whether it appeared on the face of itthat there might have been an injustice involved. Over the years I have personally done a



number of these matters before disciplinary tribunals, so I have got some familiarity with theprocess. It seemed to me that there were probably some discrepancies between witnesses andsome matters that deserved further attention. As I recall, I simply wrote and said, ‘Would youplease reconsider, having regard to the matters that we identified.’

From my point of view, if anyone else were to bring forward matters of concern where itwas within my power to refer them to a decision maker, I would do the same. Essentially, ifyou think there might be a miscarriage of justice, the least you can do is seek an assurancefrom those involved that all the proper processes have been followed—including attachingproper weight to the evidence and giving it the proper level of scrutiny. There are obviouslycareer-threatening consequences that flow to an individual who is found guilty in the way thathe had been. All I can say is that if others come to ask for help in that way, I would similarlylook at the merits of the action. I have done that ever since I have been in parliament. Iremember when I was a backbencher I was asked to intervene. At first blush, you are a bitdisinclined to intervene because of the complexities of the issue but, to the extent you can,you will get a sense of whether you think it ought to be taken further. So that is where it will.

Senator MARK BISHOP—Did you know the complainant who wrote to you?Senator Alston—No, I do not think so.Senator MARK BISHOP—Were you familiar with his name?Senator Alston—No, I do not think so.Senator MARK BISHOP—Did you make any inquiries?Senator Alston—As to what—whether he was a real person?Senator MARK BISHOP—This intrigues me. Ministers of the Crown obviously get dozens,

if not hundreds, of complaints about matters like this—backbenchers like me do—questioningthe integrity of administrative law procedures, appeal procedures and God knows what. In thecase of this one, you have looked at it and presumably taken advice from departmental officialsor they have come to you with a recommendation.

Senator Alston—I cannot remember that. Maybe we did.Senator MARK BISHOP—Minister, I get stacks of letters complaining about these sorts

of things. You would get a lot more than I do, having the ability to fix a lot of problems. Thedepartment has looked at this and for some reason brought it to your attention as different fromall of the other complaints that your office would receive.

Senator Alston—I am not sure by what channels it came to me. People often write directto us in a way that does not go through the department. If it came to me direct, I do not thinkI would necessarily have asked the department to try to assess the evidence. With all humility,I would probably think I was just as capable of doing it as they were.

Senator MARK BISHOP—Did your advisers assess the matter?Senator Alston—Yes, someone in the office had a look at it.Senator MARK BISHOP—Did they draw your to attention the fact that the complainant

had been involved in fairly vigorous reform group activities in industrial organisations, tradeunions, in New South Wales over a period of time?

Senator Alston—I think we were aware that either he might have been or he belonged toan organisation that had been.

Senator MARK BISHOP—PDOU, Postal Delivery Officers Union; is that what it is called?



Mr Ryan —I believe that is what it is called.Senator MARK BISHOP—It is either a reform group or a proposed alternative to the

registered trade union.Senator Alston—Yes.Senator MARK BISHOP—You were aware of his involvement in that organisation?Senator Alston—Whether he was involved in it or simply a member of it, I do not know.Senator MARK BISHOP—You do not regard your request to the corporation to review

the processes this man underwent as being anything other than atypical?Senator Alston—Probably typical in the sense that, if a matter were brought to my attention

where I thought that there might have been a miscarriage of justice or that it deserved furtherscrutiny, I would refer that on. It would not be confined to people who might have had apolitical axe to grind.

Senator MARK BISHOP—How many agencies report to you—15, 20?Mr Stevens—It would be 20, 25.Senator MARK BISHOP—That is a lot of agencies. All of them are public sector agencies

with a heavy involvement in administrative law procedures and the like, aren’t they? Howmany complaints do you get of this nature? How many have you had since you have been aminister?

Senator Alston—I could not tell you that off the top of my head. I could make someinquiries.

Senator MARK BISHOP—Would it be 25?Senator Alston—I would not have a clue.Senator MARK BISHOP—Mr Stevens, do you know?Mr Stevens—No, I do not know. It does happen from time to time.Senator MARK BISHOP—It does happen from time to time?Mr Stevens—Yes—from a range of agencies. People have a grievance and they write to

the department and to the minister and seek his involvement.Senator MARK BISHOP—Of course they do. Lots of people do that.Senator Alston—Yes. As you say, some of them, on the face of it, are over the top and

clearly deranged. There is not much you can do to help them. To others, you say that it soundsquite plausible and deserves further examination.

Senator MARK BISHOP—I acknowledge that some do seem deranged—and they go inthe bin—but some seem to be arguable or plausible. How many of those have you written offto your other 25 agencies asking them to do an independent review?

Senator Alston—I suppose it is more a matter of what has been brought to my attentionrather than how many there might possibly have been.

Senator MARK BISHOP—How many of those others—we know it is something in theorder of 25—have been brought to your attention?

Senator Alston—I honestly do not recall.

Senator MARK BISHOP—You do not recall?Senator Alston—No.



Senator MARK BISHOP—In fact: none.Senator Alston—I cannot say that.Mr Stevens—CoT is a good example, in the case of Telstra.Senator Alston—I would like to have some of the time back that I have spent on looking

at the details of CoT case complaints.Senator MARK BISHOP—We are not talking about the CoT cases; we are talking about

employees of agencies that report to you with allegations of—Senator Alston—But CoT cases are an example of someone classically aggrieved by the

system. We have pursued those matters with Telstra and—as you would no doubt know—bothin opposition and in government, I have been quite critical of the process.

Senator MARK BISHOP—Let us not muddy the water; let us get back to what we weretalking about. How many of those other complaints, excluding the CoT cases, have beenbrought to your attention? I said ‘none’, and Mr Stevens has not corrected me yet.

Mr Stevens—I do not know.Senator MARK BISHOP—You do not know?Mr Stevens—No, I do not keep a record of that.Senator MARK BISHOP—You do not keep a record of those? So some have been brought

to Mr Alston’s attention?Mr Stevens—I simply cannot give you chapter and verse on that at this point.Senator MARK BISHOP—Do you recall bringing any to the minister’s attention, Mr

Stevens?Mr Stevens—It would not be done through me, anyway. The department could well do it

through a different avenue.Senator MARK BISHOP—The minister has told us the department has not brought any

to his attention. He does not recall it.Senator Alston—What I said was that some can come direct to us and, in the sense that

they are off the street, that may reflect their view of whether they are likely to get somesympathy for the proposition. I cannot judge who might think that it is worth pursuing. If itis only a small number, you only end up with a small number—even though there might bemany out there. Who knows? The mainstream postal union might think that I would be thelast person they should be approaching to have their concerns overturned.

Senator MARK BISHOP—You received this complaint from this citizen, you had a lookat it yourself, you thought there was some substance to his complaints in the corporation thatreports to you and you wrote to the management of that corporation asking them to do anindependent review. I can accept that line of argument. What I am asking you is: how manyother employees of the other 25 agencies have come to you in a similar vein, and how manyhave you thought were arguable and referred to those agencies for independent review?

Senator Alston—I cannot tell you off the top of my head. I am happy to make someinquiries, but I would still say that is not a proper test of whether or not one should respondin certain circumstances. If this is the only one brought to my attention, and the only one thatI am asked to look at in some detail, maybe all that tells you is that if people are preparedto bring matters to your attention they are likely to get a sympathetic hearing. It mayencourage more in the future, but it does not mean that somehow we are highly selective in



rejecting a number and only taking ones that we might have a predisposition towards. It isall a matter of who wants to approach you, in many respects. Probably those who watchquestion time might think I would not be necessarily the right one to be taking on the union.

Senator MARK BISHOP—No, but this unnamed complainant thinks you are the rightperson to write to and he has been proven right by the circumstances, hasn’t he?

Senator Alston—Good luck to him. If he thinks he is going to get a hearing and he getsone, that means his judgment was vindicated but it does not make it improper. It does notmean that others should not do the same thing and that I would not respond if they did.

Senator MARK BISHOP—It does not make it improper if others should do the same thing,and it does not make it improper if you should react to their complaints in a similar way. Whatdoes make it improper is if there have been a range of other similar complaints and you havenot treated them in the same way or you have had regard to some of the politicalconsiderations we have been discussing as criteria for referring it off. That would make itimproper. Would you concede that?

Senator Alston—Yes.CHAIR —Senator Bishop, we have been on this program for an hour and a quarter now

when we had a 30-minute allocation. We also have another group, the Australian Communica-tions Authority, who have come from interstate. So I would appreciate it if you could drawto a close.

Senator MARK BISHOP—I think we have probably gone as far as we can go on this issueat this stage, Mr Chairman. I thank the minister for those responses.

CHAIR —Does that mean we have finished this program?Senator MARK BISHOP—It does indeed, Mr Chairman. I thank the representatives of

Australia Post. They have been most helpful.Mr Slight —I was recalling with Mr Ryan a question that the senator asked earlier about

whether or not we had ever had any other similar referrals to legal firms. The answer to thatstill remains no, but I can recall, now that I think about it, at least one other occasion wherewe did, through a disciplinary process, refer it to some outside organisation. My recollectionof that circumstance is that we used a former commissioner of one of the IR courts.

CHAIR —Thank you, Mr Slight.Subprogram 4.4—Australian Communications Authority

CHAIR —I welcome members from the Australian Communications Authority. SenatorBishop, would you like to proceed? We do have the dinner break scheduled for 6.15 p.m.

Senator MARK BISHOP—I will try and finish by then.Senator Alston—What time were you knocking off?CHAIR —At 6.15.Senator Alston—Can I indicate for your benefit that I have a commitment between 7.30

and 8.30. So you will know if I am not here.Senator MARK BISHOP—If you are not here, we will wait for the interesting questions.Senator Alston—I am sure you will.

Senator MARK BISHOP—Dr Horton, can you just explain to the committee how thecustomer service guarantee scheme works?



Dr Horton —I could, but Ms Kelleher can do it better than me. I will ask her to do that,if you do not mind.

CHAIR —Is there something specific about it, though, Senator Bishop, because I think weknow about the CSGs, don’t we? Do you really want that on the record?

Senator MARK BISHOP—I would just like a brief introduction on the record. I am notas fully informed as you, Mr Chairman.

CHAIR —We would like to be focused in this last session, though.Senator MARK BISHOP—We will focus. Do not worry about that.Ms Kelleher—Senator, the CSG scheme sets forward a number of standards which are to

be met by carriers in providing services, principally provisioning services and fault repairservices, as well as keeping appointment times for customers. Those standards cover a rangeof circumstances under which carriers would be providing connections or fault repair timesand the CSG standard also provides a compensation mechanism for customers where thosestandards are not met.

Senator MARK BISHOP—That is good. What is the process for lodging an investigationof complaints by customers?

Ms Kelleher—If a customer believes that a standard has been breached, they should go totheir carrier and lodge a complaint and a claim before any compensation can be paid. Thecarrier would investigate that. If the carrier finds that compensation is not payable, and thecustomer is still not satisfied, the customer could go to the Telecommunications IndustryOmbudsman.

Senator MARK BISHOP—So it is the TIO who enforces the scheme?Ms Kelleher—No, the TIO considers complaints regarding the scheme. The CSG standard

is a standard made by the authority, and the authority, in that sense, enforces the scheme.Senator MARK BISHOP—How much control is in the hands of the carriers themselves?Ms Kelleher—The carriers are responsible for setting appointment times and providing

services; in that sense, the carriers have a fair amount of control. Certainly customers areentitled to receive appointment times in certain windows and, of course, it is up to thecustomer to actually request the service in the first place. So there is responsibility on bothsides.

Senator MARK BISHOP—What is your take on community awareness of the customerservice guarantee scheme?

Ms Kelleher—The ACA has done a number of studies of community awareness of the CSGscheme, because community awareness is important in ensuring that the scheme operatescorrectly. Over the last six months we have seen a steady increase in community awareness,as various programs have taken place to raise awareness. The last time we did a study ofcommunity awareness nationally was when we did a customer satisfaction survey for ourannual report, and that showed an awareness level of 43 per cent in round terms.

Senator MARK BISHOP—Do you regard that as high or low?Ms Kelleher—It is clearly better than it was at the beginning of the process.Senator MARK BISHOP—Is the trend line up?Ms Kelleher—The trend line is up and moving up steeply. I regard the level as a good level

because it indicates that a really sound number of people in the community are aware of the



CSG scheme and how it operates. It means that, if a person does have a problem—and it isoften a problem people will talk about to friends, neighbours and relatives—there is a fairlyhigh level of awareness in the community. People are likely to be made aware—if they arenot already—that when they have a problem there is a mechanism there for them to addressthe problem.

Senator MARK BISHOP—So there has been growing awareness over time—it is up to42 or 43 per cent—and the trend line is still heading upwards?

Ms Kelleher—Yes.

Senator MARK BISHOP—Mr Smith, the opposition spokesperson for telecommunications,put out a press release that was picked up in a number of papers. I think he relied upon thereport you have just identified and Telstra’s annual report itself. He identified that of the orderof 52,000 customers had received around $3.7 million. He also calculated that of the orderof 325,000 customers should have been compensated. Do you have any comment on hisfigures?

Ms Kelleher—I have seen the reports and, yes, I do have some comments. I think thereports, as we have seen them in a number of newspapers, overstate the extent to whichcompensation would be payable.

There are a few issues here. First of all, the figures that we have reported for compliancewith the CSG do not indicate what level of exemption might be applicable for CSG payments.You cannot just take the level of compliance, take the percentage away from 100 and assumethat you have actually got a measure of the number of people who may be eligible forcompensation.

There are a number of grounds on which a carrier would be exempt from meeting the CSGstandards, for example, major flooding and other natural disasters, or it might involve needingto wait for local government approval to do connections in some cases. The list is a relativelylong list. So I think that the figures are fairly over-stated in that case.

Senator MARK BISHOP—I understand that argument. Say you reduce the figure fromabout $325,000 down to something in the order of $200,000, a radical reduction. That stillleaves the conclusion that a lot of consumers are not taking advantage of complaintmechanisms and possible compensation measures, doesn’t it?

Ms Kelleher—That is right. To a large extent you would actually need to ask consumerswhy that is the case. I am certainly aware of consumers who decide that they are not interestedin the compensation, they just want their service connected or whatever, and they have madean active choice not to pursue compensation.

There is also the need to consider what the carriers themselves are doing to ensure thatcustomers are informed of CSG provisions. The CSG standard contains within it some quitestrong information provision requirements where carriers have to make information availableto customers at a number of different times on an ongoing basis.

Senator MARK BISHOP—Are the carriers carrying out those obligations to yoursatisfaction?

Ms Kelleher—We are certainly monitoring those. We are well aware of pamphlets that havebeen sent to all customers recently by both Telstra and by Optus. Telstra also has plans afootto provide information inserted with bills, and at times actually written onto bills, so thatcustomers are continually reminded of CSG provisions and entitlements.



Senator MARK BISHOP—If Telstra and C&W wrote to their consumers on a regular basis,identified the availability of the CSG scheme in their phone accounts and whatever, wouldyou regard that as full satisfaction of their obligations?

Ms Kelleher—That would satisfy part of their obligations. They also have obligations toinform customers of the CSG provisions once they become customers of the company, andwe know that that is being addressed by way of welcome kits, brochures that are given tocustomers at the time.

Another thing which carriers are obliged to tell their customers is when they are aware thatthe CSG has not been met. At that point they are also obliged to inform their customers thatthe customer may well be entitled to compensation.

Senator MARK BISHOP—Do you have a view that carriers are hindering the operationof the scheme in any way?

Ms Kelleher—I do not have a view that they are hindering the operation of the scheme.That is—

Senator MARK BISHOP—Is that too strong?Ms Kelleher—It is a very active description. We are aware, certainly through statistics that

the TIO receives, that some customers do not believe they are being made aware of thescheme. Within the authority we have discussed the need to look at the operation of theinformation provision requirements. Those requirements came into force in July 1998 and haveonly been in force for six months. We were aware that they would take a little time to actuallybe put into place because, as you can imagine, it requires training of significant numbers offront-line staff in those organisations. We are now of the view that we are close to the timewhere we should investigate whether or not those provisions have been put into placeeffectively.

Senator MARK BISHOP—When do you plan to do that investigation, Ms Kelleher?Ms Kelleher—Probably before the end of this financial year.Senator MARK BISHOP—You said you thought the use of the word ‘hindering’ was too

strong with respect to the carriers. Are you satisfied that the carriers are doing enough toadvertise the availability of CSG schemes to potentially aggrieved consumers?

Ms Kelleher—We have seen strong evidence of information available. Information iscontained, for example, in the white pages about the CSG. Certainly there are brochuresavailable and those brochures have been made available to all customers over a billing cycle.

Senator MARK BISHOP—If I ring up Telstra or Cable and Wireless and ask them to comeand fix my line because it has gone dud and someone does not come for four or five days,or I want to get another phone put into a new house or flat and they cannot do it for three orfour weeks, in both of those instances the carrier is in breach of its obligations under thisscheme. Do you think it would be appropriate for the carriers to advise me as a consumer ofthe availability of compensation mechanisms?

Ms Kelleher—Certainly, if they are in breach of the scheme, they are obliged under theterms of the standard to inform customers.

Senator MARK BISHOP—Are you satisfied that they are carrying out that requirement?Ms Kelleher—I cannot answer the question at the moment because, as I say, that element

of the provisions really needs us to do an investigation to ensure that it is being implemented.Clearly, there are growing numbers of compensation claims being made by carriers. Therefore,



it would appear as if carriers are informing customers. I could not give you an assurance atthis stage that 100 per cent of customers affected will be informed.

Senator MARK BISHOP—Indeed, you know 100 per cent of affected customers are not.Dr Horton —Can I come in on that because it does expect the carrier to know when it is

in breach. That may be an unreasonable expectation in some cases.Senator MARK BISHOP—If I ring up Telstra or Cable and Wireless or any carrier and

advise them that my line is not working, that I cannot receive phone calls, and they say, ‘Okay,Mr Bishop, but we’re busy, we’ll have someone out to your home in eight days,’ eight daysis clearly in breach of their obligations.

Dr Horton —The question you are asking is whether people should automatically be toldthat by the carrier at the time and—

Senator MARK BISHOP—That is right, why shouldn’t I be told that?Dr Horton —I am not so sure that that is part of the scheme. It may be something that the

carriers may do voluntarily.Senator MARK BISHOP—The carrier tells me as a consumer that he cannot fix my line

for eight days. However, it has got a requirement to fix it within whatever it is under thescheme.

Dr Horton —I understand that.Senator MARK BISHOP—Are you arguing that the carrier does not have an obligation

to inform me as the consumer of the availability of compensation procedures?Dr Horton —In the event itself, no, the carrier does not, but it is obliged to let you know

at some stage.Senator MARK BISHOP—At some stage?Dr Horton —Yes.Senator MARK BISHOP—Do you regard that as satisfactory, Dr Horton?Dr Horton —The carrier is required to take reasonable steps. It is a question of judgment

for the carrier.Senator MARK BISHOP—We have got a pretty clear situation here. I have asked to have

my line fixed and the carrier says, ‘No, I can’t do it for eight days.’ It has to take reasonablesteps to inform me of my rights. Wouldn’t it be reasonable under those circumstances for theofficer who receives the complaint to inform me of my rights? How am I going to know myrights if they will not tell me?

Dr Horton —Each person will have a different opinion on what reasonable might be.Senator MARK BISHOP—It is pretty unreasonable if the phone does not get fixed for

eight days, isn’t it?Dr Horton —In that example, yes.Senator MARK BISHOP—We are talking a specific fact situation that is unreasonable.

It is either reasonable for them to adhere to the standards established by your organisation,or inform me of the consequences.

Dr Horton —Making a judgment on reasonability is where the problem is. If it was a lotcloser an example then it would be a lot more difficult to give you a—

Senator MARK BISHOP—I deliberately chose an extreme situation.



Dr Horton —Yes, but we cannot generalise from that.Senator MARK BISHOP—It is reasonable for them to put it in the white pages, and it is

reasonable for them to put it in three-monthly bills.Dr Horton —Yes, but the issue you are getting at is whether it occurs at the time of the

breach,—Senator MARK BISHOP—Yes.Dr Horton —not whether it was in the white pages all the time, or it has been in the last

billing cycle, but whether on that occasion the carrier has informed that person of their rightsunder the compensation scheme.

Senator MARK BISHOP—When does the ACA think the aggrieved consumer should beadvised by the carrier of his or her rights?

Dr Horton —Obviously, when there is a breach. But the qualification is the reasonability,and so we cannot give you a 100 per cent guarantee that this occurs—because people havea different qualification of what reasonability might be.

Senator MARK BISHOP—So you do not think there should be a general standard, carriedout by the line officers of the carriers, at first instance?

Dr Horton —No, I did not say that there should not be one.Senator MARK BISHOP—You think there should be one?Dr Horton —Yes.Senator MARK BISHOP—Do you think that they should advise consumers?Dr Horton —Yes, I do—because, as you know, the comprehensibility or understanding of

this scheme is reasonably low, at 45 per cent or whatever it was. If there was a much morewidespread understanding of the scheme, then I think there would be less need for carriersto inform customers of a breach at any particular time. But it is always at the carrier’sjudgment, and that is why there is some greyness about that.

Senator MARK BISHOP—I understand the point that you are making. You are going tohave this review procedure carried out by the end of the financial year. Will that examine thisspecific issue of the carrier advising complainants, at first instance, of their rights?

Ms Kelleher—The review will look at the three information requirements within thestandard and will examine the extent to which they have been implemented by carriers sincethe introduction of that standard, which was in July of last year.

Senator MARK BISHOP—Is that review procedure intended to cover the issue I haveraised with you today?

Ms Kelleher—Yes.Senator MARK BISHOP—Arising out of that review, what happens then: do you make

recommendations to the minister, or do you proceed to implement them?Ms Kelleher—The authority would need to consider the report outcome and could, if it

considered it necessary, make changes to the information provision requirements of thestandard.

Senator MARK BISHOP—That is a decision of the ACA, not of the minister; is thatcorrect?

Ms Kelleher—Of the authority, yes.



Senator MARK BISHOP—Thank you, Chair.CHAIR —Thank you, Senator Bishop; that is really good. The ACA can leave now. Thank

you for coming. I hope you all manage to catch your planes on time. We will call theTelecommunications and Postal Policy group after dinner, and we will deal with the NTA now.[6.03 p.m.]

Program 3—Broadcasting, online and information technologySubprogram 3.2—National Transmission Agency

CHAIR —We are scheduled to break in 15 minutes.Senator MARK BISHOP—I will be concluded by then. Mr McAdoo, the NTN sale bills

went through the Senate in December. Government estimates say the sale will be completedby the second quarter of 1999, and $80,000 has been promised, as I understand it, to thecommunity broadcasting sector, as compensation for the extra costs in negotiating commerciallease arrangements with the new owners. Why is the additional funding being sought? Is itjust for that purpose?

Mr Stevens—This is in the supplementary estimates. Can you refer me to the page referenceagain.

Senator MARK BISHOP—It is subprogram 3.2.Mr Stevens—Senator, can you just take me through that particular question again. I have

got the page here.Senator MARK BISHOP—It is on page 78. In the bottom table, table .5.51, you are

seeking an extra $3 million in running costs, additional estimates of $3 million. That is avariation of 46 per cent. In light of the fact that we are going out backwards, why do we needan extra $3 million in running costs?

Mr Stevens—Mr Marsden can explain that to you.Mr Marsden —The $3 million represents the fact that we are trying to do an active handover

of the NTA at sale point. Originally, when we thought we were going to sell the NTA, wethought it would be sold much earlier, so the funding was based on an earlier sale date.

Senator MARK BISHOP—So this is just carrying out the routine administrative proceduresof the agency?

Mr Marsden —Yes, and some additional work within digital.Senator MARK BISHOP—What additional work within digital?Mr Marsden —Just some trials that the NTA had planned to do.Senator MARK BISHOP—What is the impending timetable for the sale of NTA?Mr Marsden —The Office of Asset Sales believes the successful bidder will be announced

on 31 March; therefore the handover should be on 1 May of this year.Senator MARK BISHOP—I presume the bids are in now and being considered.Mr McAdoo —No, they are scheduled to close at the end of this month.Senator MARK BISHOP—What is the department’s estimated sale price? Is that

confidential information?Mr Stevens—I think that would be confidential and it would also be a matter for the Office

of Asset Sales, which are actually conducting the sale, but I think traditionally we do notmention those figures.



Senator MARK BISHOP—And the moneys received will just go into consolidated revenue.Mr Stevens—Yes, that is correct.Senator MARK BISHOP—Has the government determined what is going to be done with

that?Mr Stevens—I believe it will be debt retirement, but I do not know if there is any

hypothecation in that sense.Senator MARK BISHOP—Is that the purpose, Minister? Are sale proceeds from the NTA

for debt retirement only?Senator Alston—I understand we have said that.Senator MARK BISHOP—There has been no change in that position?Senator Alston—No.Senator MARK BISHOP—How many staff does the NTA currently employ?Mr McAdoo —Ninety-nine.Senator MARK BISHOP—What will happen to them after 1 May?Mr McAdoo —There is a possibility that some would be employed by the new owner, I

presume.Senator MARK BISHOP—Are you having discussions with the new owner? Will you have

discussions with the new owner?Mr Stevens—The new owner has not yet been selected.Senator MARK BISHOP—Will you have discussions in the future?Mr Stevens—I am sure there will be, once the successful bidder is notified.Senator MARK BISHOP—How will the government administer its promised $80,000 fund

for the community broadcasting sector? Who is going to administer these funds?Mr Stevens—The department will pass the money to the Community Broadcasting

Foundation for allocation in the normal way.Senator MARK BISHOP—Will the funds only be allocated to cover increased costs, or

are there other purposes as well?Mr Stevens—The purpose is to match the difference between what is currently a

concessional rate and what the commercial rate would be.Senator MARK BISHOP—And no other purpose?Mr Stevens—No.Senator MARK BISHOP—Thank you, chair.CHAIR —Thank you very much. We will break for dinner.

Proceedings suspended from 6.10 p.m. to 7.18 p.m.CHAIR —We reconvene this meeting of the Senate Environment, Communications,

Information Technology and the Arts Legislation Estimates.Senator LUNDY—I just want to clarify this evening’s program. My understanding is that

we have 4.1 and 3.1 before the committee now. When is it possible to go to general questionsfor the department, as I outlined this morning?

Mr Stevens—You are talking about the arts area?



Senator LUNDY—Yes.Mr Stevens—We can do it under subprogram 1.1—arts and heritage. That is probably the

best place.Senator LUNDY—Okay.CHAIR —The other point to make is that Senator Faulkner is coming at 8.30 and wants to

ask general questions of the minister. We will try and do what we can before then and getonto the arts at the end of the evening. Senator Faulkner tends to occupy quite a bit of timewith his general questions, so 8.30 might mean he will be here perhaps until 10 or 10.30. Wemight have to extend a little bit after 11 o’clock so that Senator Lundy can finish her compo-nent.

Mr Stevens—Yes, I was just thinking in terms of the minister’s arrival back at 8.30.CHAIR —Senator Faulkner is not coming until 8.30.Mr Stevens—It is going to be a close thing.CHAIR —They will be together.

[7.20 p.m.]Subprogram 3.1—Broadcasting policy, information technology and regional telecommunications

Senator LUNDY—I would like to begin by asking questions in relation to the datacastingreview process. Could you outline for me briefly what stage it is at?

Mr Stevens—As you would be aware, there are a number of reviews which have to beundertaken following the passage of legislation by the parliament. Those reviews are now inthe process of being undertaken. We have issued a number of discussion papers on many ofthe individual reviews and we have sought submissions back from those reviews. In some caseswe still have a couple of weeks to go before submissions close on some of the reviews. Oncewe get those submissions back, we will obviously consider the views expressed and take itfrom there.

Senator LUNDY—Just for my benefit, can you outline what those specific reviews are andthe time frames for each of them?

Mr Stevens—The act requires a number of reviews to be conducted by 1 January 2000. Thereviews which were identified in the act were into the scope of datacasting services; theprovision of enhanced services; part 4 reviews, including high definition television formats,goals and targets and captioning standards; multichannelling by public broadcasters; provisionof new services in underserved regional licence areas; regulatory arrangements that shouldapply to the allocation of spectrum in the broadcasting services bands for datacasting, includingthe transmission of community television in digital mode in the datacasting spectrum;retransmission of digital free-to-air services on pay television; and, finally, convergencebetween broadcast services and other services. These were specified in the act and we haveto report back by 1 January 2000.

Senator LUNDY—Given the large number of those reviews, does each of those have a settime frame, timetable, dates allocated for responses et cetera?

Mr Stevens—Yes. When we issue a discussion paper, we have in each case indicated a dateby which we would like to have the responses back.

Senator LUNDY—Let us look at the scope of the datacasting one as an example. What isthe time frame for that?



Mr Stevens—It was released at the beginning of November 1998. The submissions on thathave now been received and we are in the processing of considering them.

Senator LUNDY—Are those submissions available?Mr Stevens—They are on the web site.Senator LUNDY—You have posted them all on the web site?Mr Stevens—Yes.Senator LUNDY—I have a question on the direction in which the government is heading

with respect to how to define datacasting. You advised me of proposed amendments to theCopyright Act in relation to the definition of broadcasting and in looking at new transmissionrights. Have you determined a path with respect to changing the definition of broadcastingin that way as a general approach?

Mr Stevens—No, we are still in the process of considering these issues. We have reachedno conclusions at this point.

Senator LUNDY—So the information you provided earlier with respect to the CopyrightAct was just in response to what particular issue?

Mr Stevens—To the particular issue that you raised.Senator LUNDY—Okay. If you were to change the definitions within the scope of that

particular act, what would be the ramifications for other pieces of legislation which use similarterminology?

Mr Stevens—I guess it depends a little bit on what those changes are. But, clearly, wewould have to consider any flow-on implications.

Senator LUNDY—You mentioned the amendments to the Copyright Act. For the sake ofconsistency, is it likely that we will see a raft of amendments that will deal with definitionsacross a range of acts?

Dr Stretton—Sorry, Senator, I could not hear because of the conversation.Senator LUNDY—I am just trying to ascertain the impact of the mooted changes to the

Copyright Act with respect to the definition of broadcasting and whether it is at this stagelooking like you will amend a series of acts that do refer to those kinds of services for thesake of consistency.

Dr Stretton—I think the amendments to the Copyright Act are in a sense an attempt to putin place a regime which will ensure that the creators, the owners of the copyright and usersof the copyright material, will be in a position where that right is technology neutral. That isclearly the intent of the new transmission right.

It is an attempt to ensure that the copyright regime is up to date with digital technology.Obviously, as you are implying, digital technology, possibly broader convergence of sectors,could well have implications, probably will have implications, for regulation of a range ofbroadcasting telecommunications online areas over the next X years. Obviously, thegovernment would be monitoring that very carefully to work through what are the appropriatechanges to those regulatory models and when should those changes be implemented.

So I think it is more the fact that you have got the technology change driving both ratherthan the fact that the change to this act automatically means that you have to change, say, theBSA or the Telecommunications Act. There is a common driver—I do not mean to imply thereare none, and obviously this is an issue that we are still thinking about—but I think the



connection is more in terms of the driver rather than in direct connections between a changeto the Copyright Act automatically implying that we have to change, say, the BSA.

Senator LUNDY—I accept your point. I guess I am just trying to ascertain what the impactof it is because I think your point is quite valid. Obviously, this is something that is goingto impact on quite a wide range of legislation. I might come back to that when we get tocopyright and intellectual property. An issue that has come up since we last spoke, and I amnot sure where it fits under the new arrangements, is the issue of encryption and onlineprivacy.

Mr Stevens—I think we should tackle that under the National Office for the InformationEconomy, subprogram 3.6.

Senator LUNDY—Okay.Mr Stevens—It does have implications elsewhere but let us do it there.Senator LUNDY—Yes. Mr Stevens, perhaps you can help me in terms of these particular

subprograms because so many of the policy issues relating particularly to information tech-nology come under NOIE or, indeed, Office for Government Online.

Mr Stevens—We have the officers here tonight now. Certainly, the Office for GovernmentOnline are here and I think some of the information economy people are here. I am happyto try to be as flexible as we can—

CHAIR —Do you want to do this as a big open forum with all the officers? We could dothis until 8.30 p.m. What do you think, Senator Lundy?

Senator LUNDY—Yes.CHAIR —If your questions are going to cover different areas, that might be the way to go,

if there are enough chairs around the table.Senator LUNDY—Why don’t we move down the path of intellectual property and call 2.1?

I am sorry about this, but I am grappling with the changed arrangements and where each ofthe areas fall within your department.

Mr Stevens—I understand the problem. We are happy to be as flexible as we can. If youwould like to ask the questions, I can certainly see if we have got the people here.

Senator LUNDY—Yes.CHAIR —That is probably a good arrangement, Mr Stevens. Senator Lundy, you ask the

questions and we will cover the ground.Senator LUNDY—We will see what we can come up with—no problem. The moral rights

provisions of the copyright—Mr Stevens—Senator, I have been told that our intellectual property person will not be here

until 8 o’clock. So I apologise for that.Senator LUNDY—Okay.Dr Stretton—We have called her now and have asked her to come in. She will be here as

soon as she can.Senator LUNDY—Perhaps we can talk about regional telecommunications? With respect

to the information circulated by the department about the range of projects that have beenfunded under the RTIF—44 projects across the nation and $69 million so far—are theyaccurate figures or are they old?

Dr Williamson —I think those figures can be updated.



Senator LUNDY—Okay. I am particularly interested in the aims behind RTIF. We haveall heard the government’s stated aim, rhetoric, about getting rural people online, but do youhave distinct figures about how many additional people in rural and regional Australia haveactually benefited and got online as a result of RTIF initiatives?

Dr Williamson —We do not have figures at this stage. The nature of the program is thatit has been driven by community needs. It has not set out to define what should be deliveredto communities and then put infrastructure in place. It has more called for regions andcommunities to define their own needs and then funded projects to get those needs met,whether that is by infrastructure or by delivering services over existing infrastructure orupgrading existing infrastructure.

At the stage we are at there are not all that many projects which have been funded andfinished. We are in the process of commencing quite an extensive evaluation process whichwill give us those sorts of figures, but we have not really started surveying because we areat too early a stage in the program, at this stage.

Senator LUNDY—When do you hope to be able to embark on that?

Dr Williamson —The question is to get that information finalised. At the moment, they willgo out to every project that is funded under the program in six-monthly intervals. We shouldbe getting the first of those out within the next few months. Progressively over the years thatcome, we will be having that information available.

Senator LUNDY—How will that be presented for parliament? Will you compile a reportor will it form part of the annual report for the department?

Dr Williamson —It would certainly form part of the annual report of the RTIF board.

Senator LUNDY—Right.

Dr Williamson —We would most likely put it up on the web site to make it availablegenerally.

Senator LUNDY—In terms of your actual administration of the program, how many peoplein your section are working on the RTIF?

Dr Williamson —Approximately 20.

Senator LUNDY—How long has it been 20 people?

Dr Williamson —I would have to preface this by saying that I have joined this program onlyin the last few months, but I think that number has applied since the program was launched18 or 20 months ago.

Senator LUNDY—Do you envisage that it will stay at around that level?

Dr Williamson —Yes.

Senator LUNDY—Could you take on notice to provide the costs and the positions perclassification of that team managing the RTIF project?

Dr Williamson —Certainly.

Senator LUNDY—Farmwide is one of the RTIF funded projects and within FarmwideTelstra is a significant partner, as I understand it.

Dr Williamson —I think Telstra and other carriers are parts of different trials under thatprogram.



Senator LUNDY—Yes. In terms of Telstra’s involvement in various RTIF projects, are youable to tell the committee how many specific RTIF projects Telstra are actually participantsin?

Dr Williamson —We could take that on notice and provide that information. I do not haveit with me at the moment. It would be quite a significant number. The way these projectsgenerally work is that a community will define its need and then the provision of the serviceor the infrastructure will be put out to competitive tender. In many cases, Telstra is the obviouscommercial body that is present with infrastructure in place that can provide what is askedfor.

Senator LUNDY—Why is that?Dr Williamson —Just because of the ubiquitous nature of Telstra’s coverage of Australia.Senator LUNDY—They still sort of have a monopoly out there, haven’t they?Dr Williamson —I guess they have, yes.Senator LUNDY—I am curious with respect to that, given the nature, of course, of the RTIF

funds emanating from proceeds from the sale of Telstra. I think it will be interesting to seeto what degree they then subsequently participate in RTIF funded projects and get paid forthe honour of participating.

Dr Williamson —They are certainly not the only carrier that does participate. I would guess,as time goes by and more carriers do come into the market, we will find other carriers thatdo participate in the same way. Under that Farmwide project you mentioned, as I said Telstrais not the only carrier. I think, from memory, AAPT is participating in some satellite trials.

Senator LUNDY—And Hughes and Ericsson, I think, are part of one of the partnerships.If you could just provide details of that I think that would be useful information. What ishappening with respect to the federal government’s involvement in getting rural and regionalschools online?

Dr Williamson —I do not know about that one.Mr Stevens—Is that a specific project?Senator LUNDY—No, I am just asking whether there is a specific project. I understand

there may be projects within RTIF but it is a general question about—Dr Williamson —I think the education portfolio did have a project EdNA, which was getting

schools generally online and which would include regional and rural schools.Senator LUNDY—Is your section involved at all in looking at options for policies that

make access to telecommunication networks more affordable for those seeking to get onlineaccess? Do you get involved in that kind of area at all?

Mr Stevens—Yes, we sometimes use the expertise of that group.Senator LUNDY—Of what group?Mr Stevens—Of the RTIF secretariat. They have the expertise. They are aware of the issues

on the ground and therefore we use that expertise when we are developing those sorts of policyissues.

Senator LUNDY—Maybe it is a question better directed to you, Mr Stevens. To what extentdo you get involved in issues of access and equity to the Internet in this subprogram?

Mr Stevens—If you are talking about the overall department then clearly that is an issuewhich we are concerned about, yes.



Senator LUNDY—My reading of it is that you do information technology policy. Thequestion is: is online access and equity part of your policy considerations and, if so, how doesthat manifest itself in your activities?

Mr Stevens—It has manifested in the past. There have been a number of specific programsdesigned to help people get online. There was a public access program—

Dr Badger—There was a public access program and a program for disabled access.Mr Stevens—We can give you details of those specific programs.Senator LUNDY—When you talk about the public access program, what is that specifically?Mr Stevens—It was a smallish program, about $2 million I think, for which we called

applications about 18 months ago.Senator LUNDY—What is happening with it?Mr Stevens—I think we have committed all the money under the program.Senator LUNDY—And that is distinct from the RTIF?Mr Stevens—Yes.Senator LUNDY—Who administers that particular program?Mr Stevens—I think it was done within the department.Dr Badger—The people who administered it originally were in an online area we had in

the department and they carried through to finish off the administration associated with thepeople in the RTIF area. I think the final funds will be utilised by the end of June this year,so that program has effectively run its course. There are a number of projects that have beenfunded. We can give you a list of who they are and what they have done.

Senator LUNDY—Could you take that on notice and provide that detail. Mr Stevens,perhaps I can use this opportunity for you to provide an explanation of the changingarrangements and the various elements of IT policy across both DIST and others that werepulled into DOCITA post-election and through the machinery of government changes. Thatmight help me clarify what is going where.

Mr Stevens—Again, in regard to the electronic commerce aspects of the former DISTdepartment, they would be best looked at under the National Office for the InformationEconomy. The actual IT industry development is found under subprogram 3.1.

Senator LUNDY—So under this subprogram we are looking at now?Mr Stevens—Yes.Senator LUNDY—One of the big issues on the agenda at the moment is skills shortage.

Are you handling that?Mr Stevens—That is being done jointly. NOIE has an involvement in that. Because of the

ubiquitous nature of the skills shortage it is something that goes to the electronic commerceeconomy generally rather than just to the industry development aspects of IT.

Senator LUNDY—Is the IT skills task force set up under you or NOIE?Mr Stevens—It is under the National Office but we have got someone here who can answer

the question for you.

Senator LUNDY—I will go into broader issues of industry development. With respect toIT industry development there has been quite a degree of public speculation about the rolethat venture capital plays, and I have noticed with interest a predisposition of the minister in



relation to this matter. Can you provide the committee with details as to what the express viewof the department is in relation to the role of venture capital in growing the IT sector?

Mr Stevens—I think you are going to issues of policy and advice we have given ourminister which are very difficult for us to canvass.

Senator LUNDY—That is probably a fair comment. Remind me to ask the minister thatquestion, Mr Stevens, when he comes back, will you?

Mr Stevens—I will make a note of it.Senator LUNDY—One of the other issues with respect to industry development is

Australia’s ability to be represented at international forums and profile Australian talent. Isit your role to handle that or is that something still contained within Austrade and otheragencies?

Mr Stevens—It depends on the international forums you are talking about.Senator LUNDY—Like CeBIT.Mr Stevens—No, that is essentially a trade matter. Austrade would be responsible for

organising industry development aspects of CeBIT. We would have some interest in it but itis essentially the investment attraction cum Austrade issues.

Senator LUNDY—So what do you do to promote industry development of the IT sector?Mr Stevens—There have been a number of ongoing programs that the department were

running in regard to particularly small and medium sized enterprises. We are happy to giveyou details of those programs.

Senator LUNDY—Yes, please. Are there any in particular?Mr Stevens—The major ones. Obviously the IT outsourcing initiative has an industry

development component associated with it.Senator LUNDY—So you manage that?Mr Stevens—We are involved jointly with the Office of Asset Sales and IT Outsourcing

on that part of it, yes.Senator LUNDY—Which officers are involved in that, specifically?Mr Stevens—It comes under Mr Sutton’s branch. The actual officers concerned tend to work

within the office of asset sales.Dr Badger—We have some staff seconded on an as required basis to work on industry

development advice for OASITO in assessing the outsourcing bids.Senator LUNDY—Seconded from where?Dr Badger—From our department—people from the information and communication

industry development branch that Mr Sutton heads. They are the people who were part of thegroup that were in DIST who transferred to the department under the changes.

Senator LUNDY—So they were with DIST originally and they have transferred here andnow are under Mr Sutton’s branch?

Dr Badger—That is right. They are in that branch and they are people who assist with theindustry development aspects of the assessment of the bidding process.

Senator LUNDY—In terms of their relationship with OASITO, how does that work? Dothey provide advice when requested by that office or do they work with consultants from thatoffice?



Dr Badger—There is an assessment process that takes place that has a range of contributionsto it, including advice from consultants that OASITO has hired. These are people who arefamiliar with industry development programs and the nature of Australia’s IT industry and theyare part of that process.

Senator LUNDY—Are you familiar with the clause contained in the cluster 3 contract, oris someone here who is familiar with the provisions contained within the IT outsourcingcontracts?

Dr Badger—The contracts themselves are predominantly an issue for OASITO.

Senator LUNDY—I know, but there is an industry development clause specifically in themwhich is what you have advised them on.

Dr Badger—In the RFT there is a very large section on industry development.

Senator LUNDY—Yes. Which RFT are you referring to?

Dr Badger—The generic RFT.

Senator LUNDY—Talking about that clause, is there someone here who is familiar withit and who I can ask questions of about its application?

Mr Stevens—I am not sure we do have anyone here, Senator.

Senator LUNDY—I will persevere anyway and perhaps you can take it on notice. WhatI am specifically interested in is what method of accountability those contractors in cluster3 are given—that is the only one actually let at the moment; how you enforce the applicationof that particular clause.

Mr Stevens—We are happy to provide that information on notice.

Senator LUNDY—You have not got anyone here?

Mr Stevens—No, we have not got anyone here at the moment.

Senator LUNDY—That is a shame. I will just put a series of questions on notice. First, withrespect to the cluster 3 contract, if I could have the obligations imposed by that contractdetailed; an assessment of the degree to which those obligations have been satisfied by thecontractor to date; and the process by which the department actually measures the deliveryof the contractual requirements under that clause.

Mr Stevens—Okay.

Senator LUNDY—And details of what sanctions apply if they are not met.

Mr Stevens—Yes.

Senator LUNDY—As well, could you advise whether you have experienced any non-compliance with that contract to date and the nature of it. Could you also answer thosequestions in terms of how you propose to handle those clauses if and when subsequentcontracts are let that contain a similar clause.

Mr Stevens—Okay.

Senator LUNDY—And just another question on the relationship between the people withinMr Sutton’s branch and the workings of the Office of Asset Sales and IT Outsourcing. Iunderstand that that office has a number of people on contract who provide specific adviceon industry development. At what stage does Mr Sutton’s branch actually provide active inputto OASITO?



Mr Stevens—My understanding is that they are essentially part of the same team but theindustry development assessment is done by a group of people who include people from MrSutton’s branch but it also includes some consultants.

Senator LUNDY—So where do Mr Sutton’s branch people get their advice from on thosematters? How do they consult with industry? What process is in place?

Mr Stevens—I think we will have to take that on notice, Senator.

Dr Badger—These are people who are using their accumulated knowledge and expertisefrom working in and being associated with the industry. They talk to people—other peoplein the branch who are familiar with the issues. As you know, the assessment process is acomplex one—you can see that by looking at the RFT and the criteria—and from project toproject a group of people use the skills that are available to them to cover the full ambit ofthings that have to be assessed, so that the individuals from time to time will be involved indifferent aspects of the assessment, and they will take advice as is required.

Senator LUNDY—Perhaps I can clarify where I am coming from. There has been quitean ongoing complaint from sections of the industry about the structure of the IT outsourcingcontracts being large and vertically integrated and therefore having a predisposition to onlymultinationals being able to, first, afford to be able to tender; second, to have the capacity tofulfil the liability obligations under the contracts; and third, to actually cover the breadth andscope of the contract. So these issues are quite well worn, I guess.

So my question really goes to trying to ascertain who provides industry development adviceto those drafting the contracts and where they source their information from. Do they havecontact with Australian small to medium enterprises in this sector, and, if so, what is theprocess for their interests, their views, being carried forward and their interests representedfrom your point of view? It is about industry development. I am trying to work out how youactually develop an industry, how you represent these people.

Dr Badger—Just to make one comment that might help clarify the situation, certainly weare aware of a range of issues that have been raised by industry about processes—the overallpolicy approach, if you like. We are aware of the same sorts of things that you havementioned. However, the people who are doing the work within OASITO are operating withinthe boundaries and the guidelines that are set down by the RFT. So there are processesestablished in relation to each contract. They are not there to advise on the overall form ofthe process, and that is where a lot of the concerns are.

Senator LUNDY—So it is only in how the actual industry development clause is appliedin the post-analysis.

Dr Badger—Yes, that is right. They are doing detailed assessment work about a proposalthat is put forward and assessing it against the criteria that are spelt out in detail in the RFTs.

Senator LUNDY—So that is not really an industry development role, then. It is in the senseof, I suppose, monitoring contractual obligations.

Mr Stevens—It is also assessing bids, which is also important.

Senator LUNDY—But post-contract, so it is not about putting in place a strategy to progressthe interests of Australian IT companies, is it?

Mr Stevens—No. I think there are two issues here. I think what Dr Badger is saying is thatthe RFT sets down the parameters, but within that there is an assessment of competing industrydevelopment proposals which we are involved in.



Senator LUNDY—So you get involved in the subjective analysis of the competingtenderers. My point is that, given that so much of the substantial complaint about howAustralian industry development is being impacted upon goes back to the original structure—Dr Badger made that point—I guess my comments just reflect some of the frustration in thatit is still not solving the problem at source, so to speak.

In terms of your industry development role, what other initiatives have you got on behalfof Australian information technology companies besides what we have just described or talkedabout?

Mr Stevens—We have quite a list of them, Senator.Dr Badger—As you are probably aware, within the industry department there is

responsibility for those programs that were, if you like, leveraging off IT purchasing that havebeen in place for some time. Those include the general endorsed supplier arrangements, thepartnership for development program and the fixed term arrangements which are aboutessentially encouraging greater involvement by international companies in the Australianeconomy. That is a major part of the work of that group of people.

Senator LUNDY—Okay. Let us talk about FTA and PFD, then. What role do they currentlyhave with respect to the IT outsourcing program?

Dr Badger—Essentially, to be a player in IT outsourcing, you need to be what is effectivelydescribed as an endorsed supplier in partnership for development, and FTA companies arethose that fit into that category.

Senator LUNDY—So, for example, does the cluster 3 contract have PFD arrangementssitting within it?

Dr Badger—The PFD arrangements are, if you like, a plateau underneath the outsourcing.When the government announced the outsourcing arrangements it said that, because of themagnitude of the outsourcing contracts, it would expect industry to develop outcomes aboveand beyond those that were being achieved through the existing partnership for developmentof fixed term arrangement programs. Those programs remain in place and are still monitoredfor compliance, et cetera.

Senator LUNDY—But they do not apply under the IT outsourcing contracts?Dr Badger—They do, but—Senator LUNDY—But not for that contract?Dr Badger—It is like an initial hurdle. If you do not conform—Mr Sutton may correct me

if I am wrong—with the endorsed supplier arrangements, which FTA companies andpartnership for developing companies do, your eligibility for consideration as a legitimate partof the outsourcing approach is called into question. What we have got is that thesearrangements are in place and the outsourcing industry development assessments that are madeas part of the bids are above and beyond those.

Senator LUNDY—If that theory applies, then new entrants into the IT outsourcing fieldwould not qualify?

Dr Badger—Mr Sutton will explain the precise nature of the relationship between theeligibility criteria under the endorsed supplier arrangements and the arrangements foroutsourcing.

Mr Sutton —Generally, the precise details, Senator Lundy, of how the endorsed supplierarrangements work, I would have to take on notice. Generally speaking, though, the endorsed



supplier list is the basis of the government’s range of government procurement programsrelating to IT outsourcing.

Senator LUNDY—Was that updated, or had it some process to go through where companieshad to reapply to stay on that list?

Mr Sutton —The status of companies is under regular review, and that function is nowwithin my branch. I think it is on an ongoing basis. I am not aware of there being an overallreview of the process, but certainly companies’ status in terms of endorsed supplierarrangements are reviewed on a regular basis.

Senator LUNDY—So we have established that you have an endorsed supplier for thepurposes of even participating in the IT outsourcing program. Is that true?

Mr Sutton —I think that is correct. I will confirm that if necessary and take it on notice.

Senator LUNDY—So anyone participating in a bid—be it group 5, which I suppose is theone having finished off, and Tax being out there and others—anyone participating in any ofthose current RFTs would have to be an up-to-date endorsed supplier.

Mr Sutton —That is my understanding, yes.

Senator LUNDY—They would also have to have participated in the fixed term arrangementsPFD programs?

Mr Sutton —Not necessarily.

Senator LUNDY—That is what Dr Badger just said.

Dr Badger—No, it is the other way around: if you are an endorsed supplier. We would needto clarify the role of Australian companies in the endorsed supplier—

Senator LUNDY—I see.

Mr Sutton —The endorsed supplier arrangements are the basic element of this whole thing.Partnerships for development and fixed term arrangements generally are applied formultinational enterprises. Endorsed supplier arrangements cover everybody; PFDs and FTAsgenerally, I think, just cover multinationals.

Senator LUNDY—So you do not have to have PFD or FTA to be an endorsed supplier andparticipate in the bidding process.

Mr Sutton —Certainly not if you are an Australian company.

Senator LUNDY—The opportunities for Australian companies to participate in the biddingprocess are there if they are endorsed suppliers?

Mr Sutton —Yes, definitely.

Senator LUNDY—In terms of the actual process from that point—now that you are at thetable, Mr Sutton, if we can talk about your branch and the role that you have—do you getinvolved, first of all, in the consideration and comparing of bids and the industry developmentproposals within that, and secondly, have you at this point in time been asked to monitor theprogress to date of the cluster 3 contract?

Mr Sutton —Yes. Under the outsourcing arrangements, formerly DIST, and now ourselves,are responsible for monitoring of the industry development aspects of completed contracts.

Senator LUNDY—What are your findings so far?



Mr Sutton —There is an ongoing process going on with CSC to monitor their industrydevelopment outcomes. It is still less than a year since the contract was implemented, and theactual outcomes of that first year are still under evaluation by us, in consultation with CSC.

Senator LUNDY—Is it your intention to put out any more reports on compliance? Whatis your intention with respect to reporting back? To whom do you report back?

Mr Sutton —Certainly the industry development requirements are built into the contract.They are actually contractual requirements that have to be met by CSC, or there are penaltyclauses attached if they do not meet those industry development requirements. I am not awareof any reporting requirements, as such, under the contract. It is quite possibly a commercialmatter that is specified in the contract, but we can certainly take that question on notice forprecise details. The monitoring of the requirements is actually part of the contract betweenthe Commonwealth and CSC.

Senator LUNDY—You monitor it, but there is no arrangement for publication ornotification—I guess that is what I am trying to ascertain. You are required by the contractto monitor it?

Mr Sutton —Yes.Senator LUNDY—What is the process from that? You monitor it and you make notes. What

happens to that information?Mr Sutton —We then have to make judgments, depending on how the successful contractor

has done, as to measuring the performance against the milestones that are specified in thecontract. It then becomes a matter for consideration under the contract of whether or not itis necessary to consider invoking the penalty clauses.

Senator LUNDY—So the department makes an assessment based on your report, or youmake an assessment based on your own report?

Mr Sutton —Yes, that is correct.Senator LUNDY—You would make that assessment on whether or not there has been,

effectively, a breach of contract.Mr Sutton —Effectively, yes, that is correct.Senator LUNDY—I know I am speaking hypothetically, but I am trying to ascertain

process, so bear with me. If you found there was a breach of contract because industrydevelopment requirements had not been met, however minor, what would you do next?

Mr Sutton —It would be a case of considering that breach against the penalty clauses inthat contract and considering what other factors were allowed for in the contract that affectedour consideration.

Senator LUNDY—Would you send it somewhere else, like up to Mr Stevens, at that point,or would you still be considering this within your branch?

Mr Sutton —We would certainly be seeking advice on the range of matters that impact onthe consideration.

Senator LUNDY—Like legal advice?Mr Sutton —Quite possibly, yes, if there was any doubt in the interpretation of the

contractual clauses.Senator LUNDY—Who would you go to to get that legal advice?Mr Sutton —Initially we would go to the legal area of our department for that advice.



Senator LUNDY—If that legal advice came back to say that, in the balance of things—Iknow it is hypothetical and I am wondering how I can put a question to you that is sensiblewithout pure speculation—in fact, yes, there was a breach, and you were in a position topursue the matter, what would your next course of action be?

Mr Sutton —It is difficult because it is hypothetical, but we would have to look very closelyat the terms of the contract.

Senator LUNDY—So at that point you would get into gear and weigh up the various costanalyses of embarking on legal action, et cetera?

Mr Sutton —Yes.Senator LUNDY—The likelihood of success.Mr Sutton —I do not know the answer to this; certainly we can take this on notice—whether

the contract makes any provision for effects on the broader delivery of the outsourced servicesand whether the industry development components of the contract would require us to lookat those broader implications before making judgments on penalty clauses.

Senator LUNDY—I do not quite follow what you are saying. Are you saying that otherfactors in relation to the operation of the rest of the contract would then be brought in as afactor in that legal assessment, if you like?

Mr Sutton —If we were required to look at that under the broader terms of the contract,given that the industry development requirements are only part of the contract, then we wouldcertainly be looking at that broader range of factors.

Senator LUNDY—So how do the sanctions in the contract work? Don’t the sanctions applyjust to the industry development aspects, or are the sanctions overarching?

Mr Sutton —I would have to take that question on notice.Dr Badger—The sanction provisions in the contracts are complex. If we are not going to

leave you with a false impression of the way they work because of the detailed nature of them,I think it is best if we go back and get the details so you have the precise way it operates. Youare obviously trying to get the process in mind. There is a process set out in the contracts andit is best if we get you that in as detailed a way as possible.

Senator Lundy—Thank you, Dr Badger. You could perhaps respond to the question thattakes into account how sanctions would apply specifically to breaches of the industry develop-ment clauses as opposed to breaches generally.

Dr Badger—There are distinct penalties, and we will do that.Senator LUNDY—And the possibility or eventuality that you could actually pursue those

sanctions under that element of the clause, if it is possible, without pursuing the broadercontext.

Dr Badger—I understand the question. We will give you the detail.Senator LUNDY—Okay, thanks.Mr Stevens—Intellectual property is here now, if you want to go on to that.Senator LUNDY—Thanks. Could you just run across all those other things that you are

doing for industry development for Australian IT companies, Mr Stevens?Mr Stevens—I would be delighted to, but it might be better if I actually asked either

Michael Sutton or Dr Williamson, because they are more familiar with those issues.Senator LUNDY—I thought you found your list.



Mr Stevens—But I can’t find the right reading glasses to find the small print.

CHAIR —It is like the story of the man who went to Harrods for an elephant sandwich. Theperson in the delicatessen was completely unfazed and said, ‘I am sorry; we are out of bread,sir.’

Mr Sutton —Senator Lundy, in terms of industry development activities, the key areas ofthe branch’s work are the ones we have been talking about in the last few minutes—that is,initiatives related to government procurement. Certainly, their partnerships for development,fixed term arrangements and their involvement in the IT outsourcing process are a verysignificant part of my branch’s work.

We also have a section that delivers specific programs to assist IT development in Australia.In the last budget, there were new programs approved—a total of $28 million for twoprograms: one on software engineering quality centres which are being set up in every stateto improve the quality of software development in Australia, and the second component ofthat program relates to testing and conformance initiatives designed to overcome the barrierswhich many Australian IT companies face with testing and conformance issues and gettingacceptance on international markets.

Senator LUNDY—Like a standards thing.

Mr Sutton —We also administer a couple of programs that are nearly completed now whichare related to a high performance computing connection with Japan. There is one otherrelatively minor program, the name of which escapes me at the moment.

In addition to those programs, the branch has active involvement with a number ofinitiatives, such as the Australian Photonics Forum and the smart card forum, and general closecontacts—not really specific programs. We also have a strategy and trade section, and we aredirectly involved with a range of export promotion activities.

Senator LUNDY—Do you work with Austrade with respect to those?

Mr Sutton —We work closely with Austrade. We are also involved with the Invest Australiapart of the Department of Industry, Science and Resources on investment promotion issues.Invest Australia is the prime investment arm of the Australian government, but we workclosely with them on IT-specific matters.

With the split in the portfolios, we are also establishing very close linkages with generalindustry assistance mechanisms that are delivered through the DISR portfolio—such asAusIndustry and things like the Innovation Investment Fund—where the IT sector is a verysignificant user of the services and a potential beneficiary of the services supplied.

Senator LUNDY—What about supporting the industry associations that represent varioussectors of the IT sector—such as multimedia? Do you have any relationship with the rangeof industry associations out there that promote business?

Mr Sutton —Yes. We work very closely and consult frequently with the AustralianInformation Industries Association and AIMIA, from the Telecommunications IndustryAssociation. Dr Williamson has reminded me that the branch is also responsible foradministering the carrier development elements of the telecommunications legislation.

Senator LUNDY—In mentioning AIIA, AIMIA and ATIA, what about the associations thatrepresent the software side of things—such as AIMIA and the Internet Industry Association—that represent the ISPs, et cetera?



Mr Sutton —Generally, because of the way the portfolio has been structured, the contentissues, if you like, are handled by other parts of the department such as NOIE. We tend tohandle the actual hardware and software industry development side of things. Content mattersare handled elsewhere in relevant areas such as NOIE, and multimedia is actually handledwithin the arts area of the department.

Senator LUNDY—Just to make it confusing for everybody. That is all I have on thatparticular aspect, so if you would like to move on to the intellectual property area that wouldbe useful.

[8.14 p.m.]

Program 2—Film and intellectual property

Subprogram 2.1—Film and intellectual property policy

Senator LUNDY—I will start with the moral rights issue. To follow up on the passage ofthe Copyright Amendment Bill, the moral rights provision was withdrawn before the bill’spassage to allow for ‘further industry consultation’—I think that was the stated reason at thetime. How is that consultation progressing?

Dr Daniels—There was a forum in Sydney in August last year following the withdrawalof that part of the bill. The Attorney-General addressed the forum, and there was a lot ofdiscussion about some of the issues that were still contentious, particularly questions relatingto waiver. The forum was very well attended, and one of its outcomes was that the filmindustry said that they wanted to develop a proposal that would deal with some of theproblems they saw in the legislation, and they went away to do that.

As you are aware, there have been difficulties with different parts of the film industrycoming to an agreement about what sorts of moral rights they want, and they have not comeback to either department with a proposal. I know there have been extensive discussions. Wewere expecting them to meet again this month, and no further moves will be taken until then.

Senator LUNDY—Did you put in a time frame for the forum to respond formally to thedepartment, or did you just leave it open?

Dr Daniels—We encouraged them to come back very quickly, and we certainly expectedthat they would come back before the end of the year. They were aware that the governmentwished to introduce amended legislation as soon as possible.

Senator LUNDY—That pre-empts my next question, Dr Daniels: can we anticipate a billwith respect to moral rights soon? But from what you are saying you are not at that pointyet.

Dr Daniels—We are not at that point. We have been doing as much as we can to encouragethem to come back. We knew that if an agreement had not been reached before the end ofDecember we would probably be waiting into February. This discussion within the filmindustry builds on top of a lot of discussions that the film industry had earlier in the year, soit is a very difficult issue to resolve.

Senator LUNDY—I appreciate the complexity. I am just trying to get an idea of whatlegislative timetable you are actually envisaging at this point.

Dr Daniels—We did not set a time; we did not say, ‘If you cannot come back by a certainpoint in time.’



Senator LUNDY—I do not think I can go any further with that. If it is a case of just waitingfor them to respond, if you have not imposed a timetable upon the forum, then it is not likelythat we will to see too much activity until they get back to you.

Dr Daniels—They are very concerned and interested in the introduction of moral rights,so we expect that as soon as they have been able to reach some agreement they will initiatediscussions with us. I would have thought that that will happen before the end of this month.We are certainly expecting discussions in the next few weeks.

Senator LUNDY—Do you have anything scheduled?

Dr Daniels—No. There have been dates made for meetings but these have been broken.

Senator LUNDY—They have been broken?

Dr Daniels—Yes.

Senator LUNDY—What is your analysis of that, Dr Daniels? Is it just the contentious natureof the issue?

Dr Daniels—I think that is right. I think all the discussions at the time of the Senatecommittee investigation showed that it was a very difficult issue to resolve generally, but alot of the discussion focused on the film industry. Clearly, it is much wider than that. Therewas an enormous amount of debate within the film industry in an attempt to find solutions.So that is the cause.

Senator LUNDY—If the forum came back to you tomorrow and expressed a specific view,are you in a position to say that if the industry reaches a consensus that will be the positionthe government adopts?

Dr Daniels—In discussing this with them we have said that, if they came back with aconsensus position, it would be necessary to see if that worked for other parts of the culturalsector. I suppose that is the concern that we have had and I think that was voiced at the forum,that a solution that may well appear to work for the film industry may have other implicationsfor other parts of the cultural sector. So—

Senator LUNDY—So you have predetermined parameters which you will allow throughthe process to legislate?

Dr Daniels—No, what I was trying to bring out was that the introduction of moral rightshas an effect not just on the film industry and on creative artists within the film industry, buton visual artists, writers, all sorts of other people, and a lot of the discussion in the contextof the film industry has been about very film industry specific things. My understanding wasthat some of the proposals that were being put forward were, again, very film industry specific.So the problem is that these solutions must also be able to work for other people, for visualartists or other people who would be affected by the legislation.

Senator LUNDY—In terms of those legislative amendments and the issue of a moral rightswaiver, it seemed at the time the amendments were constructed quite specifically to apply tothat particular sector anyway, although they had broader application. I do not quite understandthe qualification you are putting on it now.

Dr Daniels—I think that the issues were particularly difficult for the film industry becausethe film industry is a collaborative industry. The area that we are talking about that wasparticularly contentious was the waiver in relation to commissioned works. But there are othercommissioned works as well, apart from film, and there are other cultural sectors wherecollaboration is important. The commercial aspect of this, and collaboration might not be as



important in visual arts or the commissioning of a public art work as it is in film, but thereare still similar sorts of issues that are there.

Senator LUNDY—I do not really want to get bogged down in the issue. From recollection,it was the issue of an up-front waiver versus a negotiated waiver with the artist, postproduction, being part of the issue that was being considered, so it was quite specific. I amjust not sure of where your comments actually take the matter, and how they shape thepotential amendment next time around; it seems to have shifted somewhat. That is just myinterpretation. I do not know if you can assist me in clarifying that, but I suspect tonight isnot the time to go into it in depth.

Dr Daniels—I can give another example of commissioned work. I mentioned thecommissioning, say, by a council, of a work of public art.

Senator LUNDY—Dr Daniels, I am more interested in whether there has been a shift inthe department’s approach to this.

Dr Daniels—No, I do not think there has been a shift.Senator LUNDY—All right, thanks. I have some questions with respect to the changes to

allow parallel importing of CDs. Specifically, can the department give an estimate of the extentto which CD prices have fallen—if, indeed, they have fallen—as a result of the introductionof parallel importing.

Dr Daniels—I do not think that we could give an estimate of the amount that prices havefallen. We are aware that there have been falls in prices recently—that some of the retailershave been selling cheaper CDs as a result of the amendments. We have certainly been lookingat media reports of the movements by Woolworths and HMV and other retailers to sellimported CDs for about $20, which is substantially less than standard retail prices.

Senator LUNDY—Is that top 10 kinds of CDs?Dr Daniels—It has been—it has been selected top 10 items. It has been fairly limited to

date. We have not been doing any systematic monitoring of prices right across the board. Thatis very difficult to do.

Senator LUNDY—The government based their whole justification for that piece oflegislation on the reduction of prices of CDs. Why has the department chosen not to followthrough and monitor the success that they claimed would come following the introduction ofthat legislation, which can only be interpreted as a retail price drop for that first order or toprange of CDs?

Dr Daniels—We are monitoring. I said that we cannot monitor in a very detailed orsystematic way.

Senator LUNDY—Why not?Dr Daniels—We have been doing as much monitoring as we can of the—Senator LUNDY—Is that because you have not been allocated the resources to conduct

that sort of monitoring and recording of alleged price drops?Dr Daniels—I think it is a little early to see the full results of the changes.Senator LUNDY—With all due respect, Dr Daniels, I do recall the minister saying, at some

point in one of his many speeches, there would be instantaneous price drops.Mr Stevens—I think all Dr Daniels is saying is that the full effects of this change will take

some time to work through. There have been price drops already. There are continuing pricedrops. Certainly in 12 months time it might be an appropriate time for us to do a survey.



Senator LUNDY—At this stage we have heard a bit of anecdotal reporting of price drops,there has been a little bit in the press and there have been some isolated incidents of notifiablecases of price drops, but there is no substantive evidence that the effect of this legislation thatthe minister claimed has come to pass. What I am trying to ascertain is what is the departmentdoing about that.

Mr Stevens—I think Dr Daniels has said there have been price drops. I do not think weaccept the idea that there have not been price changes.

Senator LUNDY—But show me: quantify those price drops. You have not been able toquantify it.

Mr Stevens—We have not done a formal survey, that is correct, but we certainly are awareof price drops on a number of occasions. As you quite rightly indicate yourself, there havebeen price drops.

Senator LUNDY—I have seen reports of price drops. You just mentioned you have not hadthe chance to survey yet or it is too soon.

Mr Stevens—I said we have not done it.Senator LUNDY—What have you got programmed to monitor and record and report

publicly on price drops with respect to CDs?Mr Stevens—I did not hear the first part of the question, Senator.Senator LUNDY—What program have you put in place to in fact do that level of

monitoring and to make the results available publicly?Mr Stevens—At this stage we have not instituted any formal survey, but that is something

we could do perhaps after 12 months.Senator LUNDY—So you do not have any plans to do that as yet?Mr Stevens—As yet.Senator LUNDY—But you do intend to do it?Mr Stevens—It is certainly an option open to us, yes.Senator LUNDY—I am looking for a bit more of a decisive response, Mr Stevens. Do you

have any allocation within your budget to conduct such a survey?Mr Stevens—No, not specifically, but it would be done from general running costs if we

chose to do it.Senator LUNDY—The minister is not here, so could you make a note of that question and

I will ask the minister as well, when he comes back, if it is his intent. Does the departmenthave any knowledge of any increase in the sale of pirated or bootlegged CDs since the changeto the law?

Dr Daniels—We have not seen any substantiated evidence of an increase in piracy sincethe change.

Senator LUNDY—How is it that you have seen reports of price drops but you have notseen any substantiated evidence of an increase in piracy? You have not seen any substantiatedevidence of the price drops either, but you are happy to cite newspaper reports at me. Yet withrespect to pirates and bootlegs you are happy to say, ‘There is no substantiated evidence.’There have certainly been newspaper reports of those increases, have there not?

Dr Daniels—There have been newspaper reports of instances of piracy of a variety of kinds,not necessarily arising from changes in the legislation.



Senator LUNDY—Are you prepared to assert that any price drops are as a result of changesto the legislation, Dr Daniels?

Dr Daniels—I think that the price drops that I was referring to in relation to the two majorretailers did relate to steps that they had taken in response to the legislation.

Senator LUNDY—How do you know that?Dr Daniels—I think that the statements they have made in the press related to the

importation of CDs.Senator LUNDY—Do you have such a detailed recollection and knowledge of the

statements that had been made in the press by those who have been victims of pirated orbootlegged CDs?

Dr Daniels—I think that the references in the press to piracy in general have related to avariety of different forms of pirated and bootlegged material that has not come into Australiaas a result of changes in legislation.

Senator LUNDY—How can you make that assertion?Dr Daniels—I recall instances of piracy that have been reported that have related to the

burning of CDs within the country from downloaded material. It is domestic piracy; it is notpiracy that has anything to do with changes in the parallel importation legislation. They arethe sorts of things that I think the press has been reporting.

Senator LUNDY—It is very interesting that you have such a selective knowledge of whatis going on out there. Is it your intention to actually formally monitor reported instances ordocumented instances, either through Customs or the AFP, of pirated or bootlegged CDs aspart of administering and monitoring the effects of this piece of legislation?

Dr Daniels—We are certainly talking to Customs about whether they have found anyincrease in pirated CDs. You would have to ask Customs about that.

Senator LUNDY—Have they told you?Dr Daniels—They have told us that there has not been any increase in piracy.Senator LUNDY—Can you provide to the committee any correspondence that is exchanged

between yourself, Customs and the AFP with respect to pirated CDs? Nothing, of course, thatis confidential for reasons of investigation, but certainly anything that can indicate the changesthat are taking place. Have you been provided with any additional resources whatsoever tocombat any adverse effects of the parallel import legislation? Is that your role?

Dr Daniels—You are aware of the $10 million music package that was introduced last year.That has been given to the Australia Council to administer.

Senator LUNDY—I am talking more about resources to counter the negative effects of theimpact, as opposed to that sort of supply side in promoting Australian music, which was whatthat fund was for. I recall the rhetoric—it was probably in the second reading speech of thislegislation—about the activities that the government would embark upon to ensure that piracywould not emerge as a response to this. I am trying to ascertain what has been done.

Dr Daniels—One of the important parts of the legislation was the increase in penalties inrelation to piracy of this sort of material. We do not have a role in enforcement. We werecertainly concerned that the legislation had very strong antipiracy measures, but we do nothave an enforcement role.

Senator LUNDY—So you do not have any role in what happens next in terms ofenforcement, monitoring piracy levels?



Dr Daniels—As I said, we certainly keep in touch with Customs.

Senator LUNDY—What is the extent of the formality of that arrangement? Is it arequirement of the act that they liaise with you or report to you?

Dr Daniels—I do not think there is any requirement of any legislation, but we have a closerelationship with Customs and we keep in touch with them. We have certainly been askingthem the very question that you have just asked me—has there been an increase in piracy?—because we have seen reports in the press. Their answer, as far as I am aware, is that they arenot aware of an increase in piracy because of the changes in legislation.

Senator LUNDY—What about an increase in piracy, without that little qualifier on the end?

Dr Daniels—I think that there are changes in technology that have concerned people—

Senator LUNDY—But that would not involve Customs—what you have described asdomestic piracy.

Dr Daniels—I am really talking about, in this case, downloading music from the Internet.There has been press coverage of that. We have been aware of that and the steps taken withinthe industry to show concern about new technology that allows that to happen. There havebeen other things that relate to domestic piracy. There has also been mention of illegitimatematerial coming in; but, as I said before, in talking to Customs, we have not seen anysubstantiated instances of those. I am also not aware of whether the industry has increasedits enforcement activities.

Senator LUNDY—It seems pretty clear, though, that because there is no formal role foryou in that place you are probably not in the best position to know, given there are nomandatory reporting requirements by the authorities to report back to you on what is happeningout there.

Dr Daniels—I think that Customs certainly would be in a better position than we are toknow some things. But we do talk to them; we do keep in touch with them.

Senator LUNDY—I am looking for substantive evidence of shifts since those laws.

CHAIR —Where are we up to?

Senator LUNDY—Intellectual property. I have a couple more questions that you could takeon notice. Could you provide the committee with information of any reported instances ofinferior or substandard products being offered for sale as a result of the changes—weappreciate, of course, that you are not going to be able to ascertain whether or not it is as aresult of changes—and any changes in the levels of pirate or bootleg product detected. Areyou aware of any instances of profiteering on the part of retailers, that is, having cheaperparallel imported CDs offered for sale at the same price of an Australian manufacturedproduct?

Dr Daniels—Again, I think there have been references in the press to an instance of thatkind but we have not been able to investigate those things.

Senator LUNDY—Why not?

Dr Daniels—I think it is also very difficult to make judgments about profiteering. We needa lot of detailed analysis—

Senator LUNDY—Let us just go back a bit. Are you in a position to investigate matterslike that? If a complaint is raised publicly, with you directly or whatever, are you in a positionto pursue it?



Dr Daniels—Some matters that have arisen in relation to CDs and the activities of retailerswe have referred to the ACCC.

Senator LUNDY—But you do not actually pursue the complaint?Dr Daniels—No.Senator LUNDY—Have you pursued a complaint on behalf of anyone since the changes

to the act?Dr Daniels—We have not pursued complaints. We have referred a number of things to the

ACCC and we would expect them to pursue those. They have particularly been in relation tothe difficulties that retailers have had in being able to source product and occasions where itappeared that they were finding it difficult to source product because companies were unwillingto provide it.

Senator LUNDY—Is that what prompted the minister to make his public statement advisingAustralian retailers where they could source overseas product?

Dr Daniels—I am not aware of that. We put out a guide to retailers to give them adviceabout where they could source—

Senator LUNDY—Overseas?Dr Daniels—How they could manage to live in the new environment after the legislation

change.Senator LUNDY—Was that an ad or something or a statement?Dr Daniels—No, it was a booklet. I have got a copy here.Senator LUNDY—I think that is what I am thinking of. So it was not a statement by the

minister; it was guidance by you. What does that actually say?Dr Daniels—It is an information for music retailers package. It was produced by the

department on the new business environment following the passage of the act and it was sentto retailers. I can provide a copy for you.

Senator LUNDY—I would appreciate that. But also can you clarify for the benefit of thecommittee that that booklet actually advised a series of overseas sources of CDs for thosecompanies that were wanting to avoid purchasing Australian made product.

Dr Daniels—No, I think it gave less explicit advice than that. It was designed to help themunderstand the new legislation. It was designed to ensure that they did not—

Senator LUNDY—Does it actually nominate overseas or international suppliers, though?Dr Daniels—I am not sure that it does. I think it gives a guide to finding overseas suppliers.Senator LUNDY—Could you just have a look to see if it does?Dr Daniels—What the booklet does is give advice on a range of approaches that retailers

can take, which includes locating new Australian based suppliers as well as overseas suppliers.So it does not merely give advice on overseas—

Senator LUNDY—I appreciate that. But does it actually nominate international sources?Dr Daniels—It gives a couple of examples, I think, of overseas distributors.Senator LUNDY—Does it give their phone number or their email address?

Dr Daniels—No. It gives some Internet addresses as well. It also gives advice on how toensure that the retailer does not bring in infringing copies.



Senator LUNDY—I am glad to hear that. How did those particular international suppliersof non-Australian made CDs get their name in this booklet? Were they just plucked out ofthe air or did they apply for the job?

Dr Daniels—This report was commissioned by us—it was not done by the department.Senator LUNDY—But it was approved by the department?Dr Daniels—Yes.Senator LUNDY—Can you tell me how those particular international suppliers got to be

the lucky ones to have their name published in your departmental advice booklet to retailers?Dr Daniels—I cannot tell you that, no.Senator LUNDY—Perhaps you could take that on notice.Dr Daniels—How the choice was made, yes.Senator LUNDY—Just detail the process by which they were selected—if their names were

drawn out of a hat or if in fact they are the only few suppliers in the whole world that couldpossibly fulfil this need.

Dr Daniels—Yes.Senator LUNDY—In contrast to CDs, DVDs are produced on a zone specific basis. I am

not overly familiar with it, but basically it causes a problem for people purchasing DVDsaround the world and then coming back to Australia and finding it is the wrong zone; theydo not work. What is the government’s attitude to this issue and what are you doing aboutit?

Dr Daniels—We have not looked in particular at DVDs, and I do not think the governmenthas a position.

Senator LUNDY—You do not know anything about it?Dr Daniels—We can take it on notice and see if we can find out anything more. Again,

there has been discussion in the press about the difficulties that you refer to, and we are, ofcourse, interested in that diagnosis of a problem, but beyond that there has not been any furtheractivity.

Senator LUNDY—Okay. If you would take that on notice that would be good.The general issue of intellectual property for digital material, be it music, creative works

et cetera: I suppose the best way for me to inquire about this is to talk about the onlineenvironment and protection of intellectual property in creative works online. Where is thedepartment at in terms of developing a policy or a strategy to deal with the challenges thatarrive with the digital environment in copyright and protection of intellectual property?

Dr Daniels—You are aware of the discussion paper that came out in mid-1997—Copyrightreform and the digital agenda?

Senator LUNDY—Yes, we were referring to it earlier. I have a copy of it.Dr Daniels—I think that canvassed a very wide range of issues, and there has been a lot

of consultation following that paper. I think something like 70 submissions were received andthere were a large number of face to face consultations right across the various areas affectedby that legislation. The consultations formed the basis of reforms that were announced byministers at the end of April 1998, and we are expecting that within the next month anexposure draft of the legislation that arises out of those decisions will be available for publiccomment. So there will be a further period of consultation.



Senator LUNDY—Right. And this is the copyright amendments that we were referring toearlier?

Dr Stretton—Yes. And there have been a number of other forums where we have reallytried to extend the discussion and the consultation in this area so that all of the affected groupsmight be able to understand and have some input into the process.

Senator LUNDY—Have the department formed a view as yet on whether or not theyenvisage a technological solution for the protection of copyright online or whether it is, likeyou say, a transfer of a technologically neutral existing copyright regime to online and justa matter of allowing the market to sort it out? What is your approach to date?

Dr Daniels—The reforms that were announced in the new legislation take a technologyneutral approach to these issues. The attempt is really made to amend the Copyright Act sothat it will work in the new environment; it will work for the Internet.

Senator LUNDY—It would probably be more reasonable to say that it would apply in thenew environment. Whether or not it would actually work is another matter.

Dr Daniels—We are hoping that it works well and that it maintains a good balance betweenusers and creators of copyright material. There has been a very good response from both usersand creators to the decisions.

Senator LUNDY—I am happy to leave 3.1 and 4.1 at that. I do want the opportunity forsome other general questions, but I understand they can be dealt with in 1.1, which is whatwe are going to now. I have some very broad questions for the whole department relating toY2K which I have been told can be dealt with within the framework program.

CHAIR —So 3.1 and 4.1 can go. What about 3.7? Senator Lundy, do you want Office forGovernment Online?

Senator LUNDY—Senator Faulkner wants to go to 1.1, regardless of the minister’s absence.CHAIR —Fair enough.

[8.53 p.m.]

Program 1—Arts and heritageSubprogram 1.1—Arts and heritage policy

Senator FAULKNER—We were waiting for the minister and the arrangement was that hewould arrive at 8.30, but traffic has not thinned out in Canberra and it is 22 minutes later. Ithink we had better kick off without him. I wanted to ask general questions. I am not quitesure who to direct them to, so I suppose, Mr Stevens, in the absence of the minister, anunusual circumstance, I will have to direct them to you. Obviously, I would prefer to directany question to the minister or to an official through the minister, but we cannot do that, sowe will just do the best we can.

I did notice an advertisement in theCanberra Timesin late January for an Assistant MediaMonitor, APS level 2, for the department’s Media Monitoring Unit. It described the MediaMonitoring Unit as providing a daily media summary for the department. I was not sure whichprogram of the department or which part of the department the Media Monitoring Unit founditself in. Could someone help me with that?

Mr Stevens—I can probably answer the question, Senator. What we have done is taken in-house our press clipping service. Essentially, that group does the press clips, and also theymonitor the TV, current affairs shows on 2CN, local radio and local TV. We found it morecost effective to do it in-house.



Senator FAULKNER—That is the reason I was asking the question. Quite a lot ofdepartments, as you would be aware, have now outsourced that particular responsibility. I amnot suggesting that the department of communications does not have special skills, of course,in this regard. How many staff members do you have in the Media Monitoring Unit?

Mr Stevens—There is one officer who is full time but works odd hours and starts very earlyin the morning, and there is an assistant who comes in for a couple of days, particularly onTuesdays. Because of the IT and computer pages in the papers that day, there is quite a heavyworkload.

Senator FAULKNER—But you are moving at least to one full-time officer, because youare advertising for one.

Mr Stevens—We certainly have one full-time officer but working odd hours, yes.Senator FAULKNER—I do not know if you are aware of the advertisement—Mr Stevens—I am not aware of the ad. I am trying to work out if that is the right ad.Senator FAULKNER—Would it be helpful if I asked the secretary to photocopy the ad

so that you or someone else knows what we are talking about? Would that help?Mr Stevens—Certainly. As I say, I am really familiar with our monitoring program.Senator FAULKNER—I really would prefer to be directing these questions through the

minister. I probably feel as uncomfortable about this as you. Anyway, we will just do the bestwe can.

Mr Stevens—I am told that is an additional person to help the existing person I wasreferring to earlier to do the work I mentioned to you.

Senator FAULKNER—Could someone let me know what the annual budget for the MediaMonitoring Unit is, please?

Mr Stevens—Certainly. I will take that on notice.Senator FAULKNER—The problem here, Mr Chairman, is that I do want to ask a couple

of questions that some people might interpret, possibly unfairly, as having a bit of a politicalspin. I do not mind if Mr Stevens answers them if the minister is at the table, but at themoment I just think it places him in a difficult position. But, given that the minister wassupposed to have been here 27 minutes ago, could someone perhaps chase him down?

CHAIR —We are seeing whether the minister is around.Senator FAULKNER—I am terribly worried about this traffic jam causing enormous

dislocation in this fair city.CHAIR —Perhaps we should bring Senator Lundy back to do some questions on arts and

heritage. When the minister returns, you can ask the minister some questions. I am sure thatwould be a fairly equitable way to go. Perhaps we should have a short tea break and wait untilSenator Lundy returns.

Proceedings suspended from 8.57 p.m. to 9.07 p.m.Subprogram 1.8—National Museum of Australia

Senator LUNDY—There are a range of issues that I would like to traverse this evening withrespect to the National Museum of Australia. I would like to start off with the alliancingarrangements with respect to the contracts being let. I know we have traversed this issue aboutthe inherent risks involved in alliancing at some length at previous estimates committeehearings, and the issue was investigated by the Joint Committee on Public Works. However,



I would like to get an update from officials as to exactly what stage the National Museum isat with the letting of contracts under the alliance framework.

Dr Stretton—We have an initial alliance agreement with the builders—Civil and Civic—Honeywell, Tyco, the architects and the Commonwealth. And, as you are aware, the exhibitiondesigner has just joined the alliance and an expanded contract is now about to be signed whichincludes the exhibition designer.

Senator LUNDY—When you say an expanded contract, can you explain what contractualrelationships are formally in place with the Commonwealth government at this point in time?

Dr Stretton—We have a formal alliance agreement with the builders, the architects and theCommonwealth. When I say expanded, all I am saying is we wish to include the exhibitiondesigner.

Senator LUNDY—I want you to go into more detail about the contractual relationships.Concerning the contract between the Commonwealth and Civil and Civic, is that distinct fromthe contract between Tyco and Civil and Civic, or Tyco and the Commonwealth? How doesit all work?

Dr Stretton—It is one contract which all parties have signed.Senator LUNDY—And what you are describing is another party joining that contract?Dr Stretton—That is correct.Senator LUNDY—The architect?Dr Stretton—No, the exhibition designer.Senator LUNDY—Which is?Dr Stretton—Anway.Senator LUNDY—I will go back to that in a minute. With respect to the alliancing, at what

further points are other partners expected to join that contract?Dr Stretton—At this stage that is expected to be the extent of the alliance agreement. The

alliance will have some suballiance agreements to cover particular areas of the work, forexample, the steel works and the facade.

Senator LUNDY—How do those suballiance agreements legally sit with the alliancecontract? What is their legal relationship with it?

Ms Casey—They are an alliance agreement between Civil and Civic and whoever thesubcontractor is.

Senator LUNDY—So basically what you are saying is that Civil and Civic carry the riskfor those suballiance members?

Ms Casey—Yes.Senator LUNDY—Is that risk spread across the other alliance members?Ms Casey—It is only spread across insofar as the project does not finish on time and is not

up to quality. Everyone shares in the risk.Senator LUNDY—With respect to those suballiance partners, are they required to fulfil any

prerequisites before tendering?Ms Casey—They were. My understanding is that there were selection criteria and there was

an assessment panel who selected those tenderers.Senator LUNDY—Who was on the selection panel?



Ms Casey—I would have to take that on notice.

Senator LUNDY—Were there members of the alliance team, or just Civil and Civic, or theconstruction committee?

Ms Casey—Civil and Civic ran the selection process for the facade and the structuralengineer.

Senator LUNDY—And you will provide the committee with details as to the selectioncriteria?

Ms Casey—Yes.

Senator LUNDY—And any prerequisites that were imposed?

Ms Casey—Yes.

Senator LUNDY—Were there any prerequisites defined by the construction committee orby the alliance partners as a whole?

Ms Casey—No, not that I am aware of.

Senator LUNDY—So the other partners, although they carry some risk with respect to theperformance of the suballiance partners, were not consulted?

Ms Casey—They were consulted in terms of the alliance leadership team where we haveon board a probity auditor. The probity auditor checked that the processes that were about tobe undertaken were in accordance with probity requirements.

Senator LUNDY—That probity auditor is engaged by whom?

Ms Casey—The probity auditor is engaged by the department as the probity auditor for theproject.

Senator LUNDY—Okay. So the position is even outside the alliance generally?

Ms Casey—Yes.

Senator LUNDY—So the probity auditor checked out the suballiance members before theytendered to make sure they prequalified?

Ms Casey—They checked out the process to ensure the selection criteria and the processwere in accordance with probity requirements.

Senator LUNDY—Did those probity requirements specifically include preselection criteriasuch as quality assurance and all the industrial relations requirements?

Ms Casey—I would need to take that on notice.

Senator LUNDY—Would you assume so?

Ms Casey—I would assume so.

Senator LUNDY—So let us take it back a step to the general alliance between Civil andCivic, Tyco and Anway. In bringing those partners together, what was the general probityauditor requirements in terms of prequalifications for those participants?

Ms Casey—If I understand you correctly, the prequalifications were that they had the abilityto undertake the project and that the company had the funds behind them to ensure that theycould carry out the work and the capability.

Dr Stretton—In addition to that, Senator, the probity auditor was involved in the selectionprocess all the way through in terms of choosing which builders were to be part of the alliance.



Senator LUNDY—Okay. Having established those prequalifications, do you know whatthey were?

Dr Stretton—The selection criteria et cetera?

Senator LUNDY—Yes.

Dr Stretton—It would be easier just to give you that on notice. Earlier in this process,Senator, you were given a copy of the call for proposals document. We will provide you withanother one. All the selection criteria are spelt out there.

Senator LUNDY—I was just looking at some responses to questions on notice that wereprovided to us yesterday.

Dr Stretton—We will provide you with a copy of the booklet, Senator.

Senator LUNDY—Is there a copy available here because I would like to ask some questionswith specific reference to the prequalifications of alliance members? In terms of the probityauditor playing a role in preselecting potential participants, can you describe how potentialparticipants were identified before that selection process took place?

Ms Casey—We advertised in the press.

Senator LUNDY—Were full tenders submitted to the construction committee?

Ms Casey—Yes, in accordance with the requirements set out in the call for proposals.

Senator LUNDY—In terms of the subsequent analysis, the selection committee for thatgeneral alliance members involved who, specifically?

Ms Casey—Graham Thompson, who chaired it; Malleson, who is from the legal firm ofMalleson Stephen Jaques; Mick Allworth is a probity auditor, senior partner of KPMG; DrAlan Stretton, from the department; Robert Peck, from the architectural team; Mike Butler,who was our probity adviser; Gordon Tasker, who was previously chairman of Ryder Hunt.We had a couple of advisers: one was Derek Berents from TWCA, from the projectmanagement team that we had.

Dr Stretton—If we have missed any, we will tell you later but I think that is the basic team.

Senator LUNDY—Did any of the participants in that initial tender process not fulfil themandatory selection criteria?

Dr Stretton—All of the criteria were mandatory.

Senator LUNDY—That is right; that is what it says.

Dr Stretton—It was so long ago and I was not expecting questions on this. I am sorry, Ido not have all the information here with me. I can take that on notice; I think it is best tobe absolutely certain.

Senator LUNDY—I would presume, given that all criteria are mandatory, that you shouldbe able to tell me whether or not all the participants in fact fulfilled that mandatoryrequirement.

Ms Casey—Are you talking about the ones who were successful?

Senator LUNDY—That was my next question. I am asking you about people who putpropositions to you in the first instance or submitted their tender or proposal. Were anyknocked out as part of that process because they did not fit the mandatory requirements?



Dr Stretton—I think there was one who it was decided did not demonstrate that they metthe mandatory criteria in terms of the documentation that they provided. If that is not correct,we will inform you.

Senator LUNDY—Could you take that on notice and let me know the specific details ofthat process. Secondly, I take it from what you are saying that all the successful participantsmet the mandatory requirements.

Dr Stretton—They did.Ms Casey—Yes.Senator LUNDY—Did that include a quality assurance certification and industrial relations

arrangements?Dr Stretton—Senator, you will be aware from that that one of the criteria related to quality,

the ability to deliver high quality outstanding building. Also, one related to workplace relations,their record et cetera.

Senator LUNDY—Was that codified in some way, in accordance with what is happeningout there in the building and construction industry generally?

Dr Stretton—That is right. We asked them to provide their track record in terms of howthey perform on other projects and any changes to that which they would expect to apply tothis project.

Senator LUNDY—Can you take on notice and provide the committee with the details ofthe degree to which each of the successful alliance partners fulfilled each of those criteria?

Dr Stretton—Senator, we might have to talk about how we handle that; some of that isfairly confidential.

Senator LUNDY—I certainly do not want to breach any confidentiality, but I am askingthis question for a specific reason.

Dr Stretton—Let me explain to you our problem and maybe you could explain to us whatyou are trying to get to. We would not want to release publicly that construction firm A wasranked 85 on this and construction firm B was ranked 95, 22 or—

Senator LUNDY—That would be very interesting information.Dr Stretton—I am sure it would be, Senator, but I do not think it is something we would

want to release. Perhaps you can give us a bit more background on what you are after.Senator LUNDY—What I am trying to ascertain is whether the successful alliance partners

met fully the requirements of the selection criteria, specifically in relation to how you wouldcodify, for example, quality assurance certification.

Dr Stretton—To pass to your question, firstly, we can certainly assure you that the teamthat was chosen met all of those criteria to a very high degree. Secondly, within those selectioncriteria, some of the benchmarks that were used—I think this is perhaps what you are after—

Senator LUNDY—Yes.Dr Stretton—we could certainly provide. I am sorry I do not have that at the back of my

mind at the moment, but I can certainly provide that information.Senator LUNDY—It is quite specific and I am asking you for a reason because it has been

alleged to me that, in fact, some did not prequalify and yet were allowed to participate in thetender process.

Dr Stretton—Senator, maybe again there is a misunderstanding. When you say prequalify—



Senator LUNDY—Yes.Dr Stretton—I am sorry that I did not pick this up earlier. The process was that we called

for tenders, in a sense, called for proposals, and they had to be in on a certain day, at a certaintime et cetera—a standard tendering process. Once they were received, our probity adviserwent through and made sure that in his opinion each of the proposals received actually metthe selection criteria and provided the information that was required and asked for in thedocument that you have.

Senator LUNDY—That is what I call prequalification. That stage is what I am callingprequalification. So when I ask whether they all prequalified, my question is: did they getthrough that process you have just described?

Dr Stretton—Okay; we will provide that information.Senator LUNDY—You have said yes except for perhaps one.Dr Stretton—Perhaps one.Senator LUNDY—And the next question was: if indeed they did, then one would make

the assumption that the successful participants in the alliance met all of the selection criteriaand all of the other requirements of the tender documentation?

Dr Stretton—Of course.Senator LUNDY—Okay. We will look with interest at that. As I said, there have been

questions raised about it and we will know when we get that information.Dr Stretton—Fine.Senator LUNDY—I would also like to ask questions about policies of the museum with

respect to contracts going to overseas companies. This issue was canvassed widely, certainlyin the local press this week, with respect to Anway and the role that they have. In regard tothe National Museum of Australia, the notion that there is an ensured indigenous, in the senseof Australian, participation in the construction and design. Design is quite an important elementof the integrity of the museum so, in the first instance, can you describe to the committee whatcommitment the alliance has, the construction committee has, to involving Australiancompanies as part of the design of the National Museum in participating in its construction?

Dr Stretton—The standard approach which we try to apply across the board to as manyissues that arise as possible, including this one, is what is best for the project, and that isbasically what drives us.

Senator LUNDY—Perhaps you can describe the process for calling for expressions ofinterest or a call for proposals. Did you go through a call for proposals process for the—

Dr Stretton—A very similar process. There is a booklet very similar to that which againwe can provide you with, Senator. The initial advertisement appeared in the key domestic pressplus in a number of international newspapers. Again, the process was supervised throughoutby a probity adviser and a probity auditor. The selection criteria were developed by a panelwhich included Dr Jonas, the museum director, and other senior personnel of the museum;Ken Gorby who is the director, research and development, of the national museum in NewZealand; and Leanne Paroissien who is, as you know, the former director of the Museum ofContemporary Art.

Senator LUNDY—I will get you to provide that on notice. How many responses did youget from that original call for proposals?

Ms Casey—Seventeen.



Senator LUNDY—How many of those were Australian?Ms Casey—Six were Australian.Senator LUNDY—Did you short-list?Ms Casey—Yes, we did.Senator LUNDY—Were any of the Australian companies included in the short list?Ms Casey—No, but one of the firms had Australian consortia.Senator LUNDY—It had Australian partners?Ms Casey—Yes.Senator LUNDY—On the question of policy, we heard earlier this evening of the great

efforts another government program went to to involve Australian companies, particularlySMEs. I refer to the IT outsourcing program. How is it that the government can go to greatlengths, or appear to go to great lengths, in one sector but not in another? Do you have aspecific view about the appropriateness of involving Australian companies in culturallyimportant projects like the National Museum?

Senator Alston—At the end of the day, what you want is a quality outcome. You willachieve that best by going for the best quality application. If that happens to be an Australian,we would be very enthusiastic about that because it would vindicate Australia. If the meritsof competing propositions were equal, then we would expect that the Australian applicationwould succeed because of the fact that it was Australian. But, if the Australian application wasinferior to a foreign one, then I would not quarrel with the best person winning.

Senator LUNDY—I guessed you would say that. As a point of consistency, the governmenthas chosen to actively provide for a role for Australian company involvement in another areaof industry that is important for industry growth. Do you consider that the role performedunder this contract in the development of the exhibition design, et cetera, is important in termsof developing Australia’s capability?

Senator Alston—Either you are in favour of the best quality outcome or you are not.Senator LUNDY—You are going to avoid the question; I am asking for an expression of

view from you in a policy sense about the involvement of Australian companies; how yourgovernment values that and what you are prepared to do to ensure that Australian companiesare extended genuine opportunities.

Senator Alston—It is a different question to preferring them, irrespective of their merit, andensuring that Australian companies have every opportunity to participate. We would certainlyprovide every encouragement and do our very best to improve the quality where that is withinthe province of government. If you are saying in the decision making process that we shouldbe preferring Australians, even though they might not be the best in terms of quality, then Iwould be surprised if even you would agree with that. I would be surprised if you would arguethat case.

Senator LUNDY—You are answering the questions at the moment. With respect to anyother major alliancing partners, are there any more to come in?

Ms Casey—No.Dr Stretton—I just want to make sure—and perhaps Dr Jonas is better able to talk about

this than me—that you appreciate the role of the exhibition designer and how it fits in withthe work of the museum. The exhibition designer is involved in designing the layout of theexhibitions. The content of the exhibitions will be developed largely by Dr Jonas and his



colleagues, and it is a very large process involving a large number of Australians andAustralian firms in that. Perhaps Dr Jonas is better able to talk about that.

Dr Jonas—I am happy to talk about that, if you would like me to. We have been designingthe content, that is telling the stories of Australia and the Australian experience, for a numberof years now and my curators do that. We have involved Australia’s leading academics,writers, film-makers and other museum experts. It is to our direction, and it is our stories thatthose designers are designing. While there has been some talk in the press saying, ‘How canAmericans tell the story of Australia,’ Americans are not telling the story of Australia.

Senator LUNDY—No, I appreciate that. The issue that has been raised is really theopportunities afforded to companies in Australia that have capability in this area. The pointis a very general one and relates to governments being able to take a position or provide amethodology that somehow supports what we have in terms of local talent. It is a broadquestion and goes to an issue of principle and approach by governments.

Senator Alston—I thought you were saying on 2CN the other day that you were hopefulthat we would end up with the best possible outcome. You were concerned about qualitycontrol measures; you did not want to see trade-offs that would undermine the integrity of theinstitution. Now all of that is an argument in favour of quality outcomes, not Australianpreferred outcomes irrespective of quality.

Senator LUNDY—That depends on your measure of value, does it not?

Senator Alston—No. You are not saying there, ‘I want the best quality Australian.’ Youare saying, ‘I want the best National Museum we can have.’ Now, if the imported submissionis of a higher quality, that is consistent with your argument.

Senator LUNDY—With all due respect, it seems that your government is doing its best toavoid the outcome of having the best possible National Museum.

Senator Alston—Your logic escapes me.

Senator LUNDY—There have been a series of changes to the National Museum plan thathave resulted in another controversy, particularly relating to the 22 trees on the Register ofthe National Estate at Acton, with 10 of those being on the construction site. The departmentwere required to seek advice from the Australian Heritage Commission prior to seeking theirminister’s approval to remove the trees. We understand that they expressed concern about theremoval of these trees and considered the department take alternatives.

Given the works approval application to clear the site has gone to the NCA, I am just tryingto ascertain what stage the approval process is at for clearing the site, and what changes havebeen instigated, if any, to protect the trees that were identified as being of heritage value.

Ms Casey—We have taken on board the Heritage Commission’s advice, but since the projecthas begun we have given serious and lengthy consideration to the heritage values of ActonPeninsula. From the initial concept, we had redesigned AIATSIS prior to public worksapproval. We have taken their concerns into account and we have, in fact, worked very closelywith the Heritage Commission and the NCA through this process. Works approval has beenprovided by the National Capital Authority.

Senator LUNDY—When was that provided?

Ms Casey—On Tuesday this week.

Dr Stretton—There is a National Capital Authority media release dated 10 February.



Senator LUNDY—And, as a result of that approval, can you provide information to thecommittee about the status of the trees that were identified by the Australian HeritageCommission?

Ms Casey—I missed the first bit.Senator LUNDY—The status of the trees? What is happening with the trees?Ms Casey—There are five trees that have to be removed from the site. Two of those are

quite sick, and so there are five out of 20 that have to be removed.Senator LUNDY—What has changed in the last couple of days with respect to the trees

and what changes to the plans have occurred to actually find a way to protect these trees?Dr Stretton—Only two changes to the plan. Firstly, the amphitheatre has been moved

slightly to the west and, as a result of that, one heritage tree has been saved.Secondly, we have changed the loading dock arrangements for the restaurant for the museum

which will be located in the museum building. As a result of that, a number of non-heritagelisted trees will be saved—they are not heritage listed trees. But they are the only two changesthat were necessary to get the NCA approval.

Senator LUNDY—Leading up to the process of applying for approval, what degree ofconsultation did you have with the NCA?

Ms Casey—The National Capital Authority have been involved in this project right fromthe beginning when the Site Advisory Committee was established on this site. We worked veryclosely with the NCA. The National Capital Authority is represented on the ConstructionCoordination Committee as well.

Senator LUNDY—The works approval for clearing the site has been separated now fromthe works approval for construction. Why is that?

Ms Casey—There are a number of works approvals that we have to obtain from the NationalCapital Authority. We have gone for the first one which involves the slab near the main hall,excavation work and the demolition of the substation. It was always planned that we wouldgo for a number of works approvals.

Senator LUNDY—Exactly what works approvals have you got at the moment?Ms Casey—We have the works approval for the excavation at the front of the site that faces

the city and the demolition of the substation.Senator LUNDY—What about the actual works approval for the start of the construction

of the site?Ms Casey—That is part of that.Dr Stretton—As a result of that, Senator, we were able to begin the earthworks.Senator LUNDY—That is the excavation?Dr Stretton—Yes.Senator LUNDY—At what status are the actual construction plans for the development?Ms Casey—We have got design development plans currently. The design development plans

were produced in about September last year. We have got detailed plans, obviously, that havebeen provided to the National Capital Authority for that excavation work. They are available.

Senator LUNDY—Have the design development plans that you are talking about that wereavailable last September changed at all?



Ms Casey—They have changed.Senator LUNDY—And are the latest changes publicly available?Ms Casey—Yes, the latest plans that we gave to the National Capital Authority are publicly

available.Senator LUNDY—Right, since when?Ms Casey—The plans that went to the National Capital Authority were available on

Monday.Senator LUNDY—Can you give a brief description of the changes from the original plans

that were submitted to the NCA?Ms Casey—As Dr Stretton said, the amphitheatre has been moved slightly to the west. The

terrace has been reduced by three metres. That is all that is in those plans.Senator LUNDY—So nothing else has changed on the plans since last September?Ms Casey—In terms of the overall design of the museum there have been several changes

and I can provide those for you. There has been a reduction in the back of house from 850square metres to 500 square metres. The children’s museum has been reduced from 500 squaremetres to 300 square metres, as requested by the council of the museum. There has been areduction in the kitchen areas from 300 square metres to 150 square metres.

There is an addition—an increased area—of 70 square metres for a small cafe between thepermanent exhibition space and the Gallery of Aboriginal Australia. There has been an increasein the total floor area for the Gallery of Aboriginal Australia from 1,500 square metres to 1,710square metres. There has been a 475-square-metre increase in the size of the theatre and theassociated foyer space and back of house and change rooms. There is a 290-square-metre netincrease resulting from other minor adjustments. They are minor adjustments that have beenmade to the design that have resulted overall in an increase.

Senator LUNDY—From the magnitude of those changes, they appear quite significant. Whathave been the motivating reasons behind those changes?

Ms Casey—To finetune the design.Dr Stretton—We would not accept that they were significant changes at all.Ms Casey—These are minor.Dr Stretton—These are very minor changes that you would expect as you develop the

design. For example, the reduction in the back of house at the museum was at the request ofthe council of the museum because they realised that they did not require all that space. Theyhad decided, as I understand it, to do most of their major conservation work at Mitchell ratherthan on site.

Senator LUNDY—Why did they decide to do that, Dr Jonas?Dr Jonas—We have got the facilities at Mitchell and council wanted to continue with those

facilities.Ms Casey—Most of the collection is stored at Mitchell.Senator LUNDY—Yes, I am aware of that but I am also aware of the continually expressed

view of how desirable it was to bring together that range of operations of the museum on toone site.

Dr Stretton—It has always been the intention, as I understand it, that the museum wouldretain its Mitchell facilities.



Senator LUNDY—I know they will retain the repository but I did not understand it to bethe intention for that type of work to stay out there particularly to the point of actuallyreducing back of house on the Acton site.

Dr Jonas—We have got on site the facilities to do what we need to do on site in terms ofthe day-to-day operating of the museum and council decided that we did not actually needto have on site facilities which will duplicate what we have got at Mitchell.

Senator LUNDY—Was it a cost issue?Dr Jonas—I do not think it was a cost issue from the point of view of the council.Dr Stretton—As the net effect of all these changes is a small increase in the total area of

the museum, in that sense it cannot be overall a cost reduction exercise.Senator LUNDY—Is it costing more or less as a result of these changes?Dr Stretton—Roughly the same. These are not significant changes; these are not dramatic

changes and the cost implications—Senator LUNDY—Okay. Have you analysed the cost implications?Dr Stretton—We are currently going through the important process in the alliance

arrangements of trying to estimate what we call the business as usual cost estimate. Thatshould be available, we would hope, within three to four weeks—something like that—andthat will bring together the cost implications of a whole range of changes such as the oneswe have discussed here. We hope also to achieve the benefits of involving the builders andthe specialist contractors early in the process to work with the design team to find clevererways to build the project.

Senator LUNDY—Okay. Let us just go back to the point when the alliance partnership wasformed. Was that on the basis of a fixed price; fixed term for the contract for the constructionof the museum?

Dr Stretton—No.Senator LUNDY—In the alliancing arrangement, how is the profit margin established for

those alliance partners?Dr Stretton—It is best to explain in terms of a lot pivoting around the concept of business

as usual which is meant to be exactly—Senator LUNDY—Is there a cost that the government has attributed to this project?Dr Stretton—Yes, $151.9 million.Senator LUNDY—Okay, out of that $151.9 million what is the business as usual cost?Dr Stretton—As I said, that is the process we are going through—Senator LUNDY—Who decides that? The alliance?Dr Stretton—Yes.Senator LUNDY—The alliance decides the business as usual bottom line so they determine

their profit?Dr Stretton—No. I am sorry I cannot answer this in five words; I can either give you a

quick—Senator LUNDY—I will be patient, Dr Stretton.Dr Stretton—That is fine. I just was not quite sure whether you would want to go through

the process or not. At the moment there are a number of workshops happening between the



builders, specialist contractors, the design team, their consultants, et cetera, looking at the detailof the design of these buildings. How can we enhance the design? How can we improve thebuildability? How can we do it in a more efficient, effective way? That is in a sense meantto be one of the advantages of the alliance process.

In a week or two, we will call a halt to that process and we will cost the design as it standsat that time. There is a very long process which again involves probity auditors to ensure thatthis is done in a proper way. But, basically, we would have our cost consultants, the builderswould have their cost consultants and we will agree what it should cost—what would be thebusiness as usual price to build the design as it stands at that time. If the alliance, if thebuilders build the building or the project for that business as usual price, they will earn whatwe would call normal profits and normal overheads.

Senator LUNDY—Which are?

Dr Stretton—They are being negotiated by the—

Senator LUNDY—What is the percentage?

Dr Stretton—I could not tell you that in an open forum because it is basically relating towhat will be the profit rate for a particular builder on a particular project.

Senator LUNDY—I think that is a reasonable question, given that it is taxpayers’ money.

Dr Stretton—If you think about it in terms of the normal fixed price contract, that is nota piece of information the public would normally have.

Senator LUNDY—But normally there would be a competitive tendering process for eachstage of subsequent letting of contracts. In this, what you have described is a collaborativeprocess where the partners of the project establish what the bottom line is in the first instance.So they can, effectively, determine the cost associated with it, establish a benchmark and dropa loading across the top so they get their margin.

Dr Stretton—No. The normal profit rate and the normal overhead rate were negotiated aspart of the selection process with the preferred bidders.

Senator LUNDY—So they have already worked out what their margin is.

Dr Stretton—We negotiated with them what margin we would provide as the normal profitand the normal overheads. As I say, that was part of the selection process.

Senator LUNDY—So they already know how much money they are going to make. Theyjust do not know what the percentage of any portion is going to be.

Dr Stretton—They know what their normal profit rate, not dollar amount, will be.

Senator LUNDY—As expressed in percentage terms?

Dr Stretton—Yes; if they are able to deliver the project on budget—that is, at BAU—ontime to an acceptable quality standard and maintain design integrity. If, for example, they werenot to deliver the project by 12 March 2001, they would face a very significant drop in profits.If they did not deliver the project to a business as usual quality, they would face a verysignificant drop in profit—that is, they would not earn any. If they do not maintain theintegrity of the design, they will lose their profits.

Senator LUNDY—How will you fix it?

Dr Stretton—Fix what?

Senator LUNDY—The lapse in design integrity.



Dr Stretton—On the design integrity, for example, we have a design integrity panel whichcomprises Leanne Paroissien and Professor Michael Keninger, whose role it is to advise thealliance on that very question of design integrity.

Ms Casey—During the whole period, not just at the end.Dr Stretton—So, again, we have processes in place to check against each of these variables.

The builder does not know what their profit will be at the end of this. They know what theprofit rate will be if they deliver business as usual, et cetera.

Senator LUNDY—Yes. That is I want to know—what the margins have been set at.Dr Stretton—As I said, Senator, I do not think that is something we can provide in an open

forum. I am not saying we cannot provide it. I just do not think it is appropriate—Senator LUNDY—Can you take it on notice to provide that to the committee.Dr Stretton—I think, Senator, we would have to—Senator LUNDY—I appreciate you will need to make sure that you can and you are not

breaching any confidentiality. If I ask you to take it on notice then you will have to go throughyour process and come back to me and tell me whether or not you can take it.

Dr Stretton—Okay, we can do that. But if I can say one thing: in the usual lump sumcontract what you will know is the total cost of the project. You will not know what thebuilder’s profit is in that project, and that is the difference that you are asking.

Senator LUNDY—I am also highly conscious of the fact that the arrangements arepredetermined and that the overall price, $151.9 million, is predetermined. The governmenthas said they will spend $151.9 million, so are you saying that out of that $151.9 million thatin fact this alliance is going to fall below that somehow? For the life of me, I cannot find thelogic in how the government will extract efficiencies and keep a control of costs of this processwhilst they have a pre-set figure of expenditure and then allow the alliance to sort out howthey are going to divvy it up between them.

Dr Stretton—As I said, the pivotal thing in this is not the $151.9 million. It is the businessas usual estimate, which has to be agreed by the Commonwealth because we are part of thealliance, and there is a clause in the contract that says that if the Commonwealth is not happywith the business as usual estimate that comes out we have the right at that stage to withdrawfrom the alliance. So the expectation is that the business as usual price will come in belowthat amount. It will come in below that amount because of the advantages that we perceiveof having the builders involved at a very early stage in the design process. And that is partof the reason why we keep having these marginal changes in design, because of that process.

Senator LUNDY—Is it your intention to make public design changes that occur betweennow and when the museum opens?

Ms Casey—Our intention is to have a model on display on Acton Peninsula and to haveplans all the way through on display and to have open days on Acton Peninsula.

Senator LUNDY—Oh, it sounds wonderful—I will make sure I attend. So if there are anysignificant changes, or in fact any changes, once this business as usual plan, costs, status, etcetera, is established we will be advised of that?

Ms Casey—And the other area is that we are reporting to the Public Works Committeeevery six months and one of their requests is that we report—

Dr Stretton—That is publicly available—every six months we have to list any changes, soit is all quite open.



Senator LUNDY—And do you have to seek approval for those changes?

Dr Stretton—Do you mean from the Public Works Committee?

Ms Casey—Only if they are major.

Dr Stretton—Only if they are major.

Senator LUNDY—Like the trees thing?

Dr Stretton—No.

Ms Casey—That is minor.

Senator LUNDY—But you still needed approval for that through the NCA?

Dr Stretton—You need to get approval from the NCA but not from the Public WorksCommittee.

Senator LUNDY—So for each change do you need to get approval from the NCA?

Dr Stretton—No. Once they give their—

Ms Casey—With approval of the works package, whatever that works package is, you justmove forward.

Senator LUNDY—So the NCA are out of the picture once they have given worksapprovals?

Ms Casey—They have got up to about 30 more works approvals to give.

Senator LUNDY—Yes, but they don’t have any option to come back and reconsideranything if there are any changes?

Ms Casey—Well, they do have an option in that the National Capital Authority isrepresented on the construction coordination committee, chaired by Jim Service, that authorisesany changes or makes recommendation on any changes.

Dr Stretton—And we could not, say, get a works approval on the basis of building a niceround building here and then turning around and deciding that we were going to build a squareone.

Senator LUNDY—That is actually what I am trying to say.

Dr Stretton—I do not know what the requirements are, but obviously we could not do thatand we would not do that—

Senator LUNDY—Because the changes that have already taken place to the plans—sincethat very first point when we saw the glorious edifice upstairs here about the winning design—have been quite profound, you can appreciate that there is a lot of scepticism in the minds ofthe public, and I have to say in mine, about what subsequent changes are still going to takeplace—given it looks completely different.

Ms Casey—When we went out looking for the architects, it was stipulated very stronglyin the design competition guidelines that we were looking for a design team and that we werenot locked into the concept that was announced because you had to work with the museumto make sure it was functional.

Senator LUNDY—With all due respect on that issue, we have traversed it previously.Tempting as it is to revisit issues relating to the design competition and various complaintsmade about that, I was not going to go down that path and I suggest you do not, either. I thinkit is a valid point about how important it is for the public and the museum community to have



confidence in the nature and construct of the museum from this day forward in the processof construction.

Dr Stretton—Obviously we agree with that and we will do everything we can to try andmake it happen.

Senator LUNDY—I have a few more questions for Dr Jonas with respect to museum staff.Have you lost any staff lately?

Dr Jonas—No, not that I am aware of.Senator LUNDY—No curators have left the National Museum recently?Dr Jonas—No, not that I am aware of, unless they have been on short-term contracts. I am

saying that because until we have settled on the final designs and so on we have been puttingsome people on on fairly short-term contracts.

Senator LUNDY—Dr Jonas, what role will you have in overseeing the design quality andthe general quality assurance issues in relation to the construction process of the NationalMuseum of Australia?

Dr Jonas—Of the exhibitions?Senator LUNDY—No, of the actual construction of the National Museum.Dr Jonas—I have very little input into that. In terms of briefs which go out I see them all

and I comment on them. But regarding the overall quality of the building and so on—apartfrom how it functions as a museum—the alliance does that.

Dr Stretton—With issues like this, the construction coordination committee chaired by JimService, who is the chairman of the museum, is the key player.

Senator LUNDY—So that position, as chairman of the National Museum board and theconstruction committee, is the only formal link between the two organisations?

Dr Stretton—It is a very strong formal link.Senator LUNDY—Yes, I appreciate that. But that is the only formal link. Is there any

mechanism through which representatives of the museum board or council can input into thatprocess?

Dr Stretton—Yes.Dr Jonas—In terms of the development of the building on the way, the plans come before

the museum council and they make comments on and sign off on that with Jim Service whothen, as you know, chairs the construction coordination committee.

When it comes to the exhibition designs, they come to council through me. And they willnot go to council unless they have got my approval and then council will sign off on themor not.

Senator LUNDY—So you will deal with Anway directly in relation to that?Dr Jonas—And I will deal with Anway directly.Senator FAULKNER—When there is a vacancy on the museum board, do you put a

recommendation to ministers of possible new appointees?Dr Jonas—We put up names to the minister, yes, through the department.Senator FAULKNER—And did the last list of names you put up to the minister include

the appointment of Mr David Barnett?Dr Jonas—I do not know who put Mr David Barnett’s name forward. It was not me.



Senator FAULKNER—No, but I am asking: was he on the list of names that wassubmitted?

Dr Jonas—No, he was not on the list of names that I put forward.Senator FAULKNER—Are you aware of the departmental processes in relation to Mr

Barnett’s appointment?Dr Jonas—No.Senator FAULKNER—Do you submit the names to the department or to the minister?Dr Jonas—To the department.Dr Stretton—It is standard practice, and I am sure it was in this case—as you can

appreciate, we have got a very large number of arts related boards to which there aresignificant appointments—to make sure that the minister is aware of nominations from variousparties and who is nominated.

Senator FAULKNER—You are from the department, aren’t you, Dr Stretton?Dr Stretton—I am.Senator FAULKNER—So does the department, with the benefit of advice from the

museum, put a list of names to the minister of possible appointees?Dr Stretton—Ms Casey would probably be better able to answer your questions because

she actually did that brief. But that would be the standard practice.Senator FAULKNER—Ms Casey, is that the way it works?Ms Casey—You would put categories forward. Certainly the way I have done it is that you

put categories forward and with some names against those categories. We have put forwardmuseum’s recommendations.

Senator FAULKNER—In this case, did the department put forward the same names as themuseum or did you add and subtract names?

Mr Stevens—That is not an appropriate sort of question—Senator FAULKNER—We have already heard that the museum did not put Mr Barnett’s

name forward. I was merely asking whether the department put the same list forward as themuseum.

Mr Stevens—I think it is inappropriate to talk about the advice we offered to the ministerson those issues.

Senator FAULKNER—Is the decision to appoint Mr Barnett a responsibility of MrMcGauran? Can you help me with that, Minister? Is it a cabinet decision?

Senator Alston—It was a cabinet decision. I thought it actually went forward in my name,but it may well have been on the—

Senator FAULKNER—I was not sure whether it was you, the Prime Minister or MrMcGauran.

Senator Alston—We are all equally responsible for this one.Senator FAULKNER—You put forward a joint submission?Senator Alston—No, I think it went forward in my name and was approved unanimously

by cabinet. But Mr McGauran, I think, probably had a role in bringing it forward in the firstinstance.



Senator FAULKNER—Mr Barnett’s name was not generated by the Prime Minister, hisoffice or the Department of the Prime Minister and Cabinet. I am just trying to check theinformation we have on the public record.

Senator Alston—I have just been reminded that the formal recommendation to the PrimeMinister was in the name of Mr McGauran, but I think it actually went forward to cabinet forconsideration. My recollection is that it would, therefore, have nominally been in my name.

Senator FAULKNER—Your advice a moment ago that it was you was wrong; in fact, itwas Mr McGauran. It does not matter—

Senator Alston—No, it was not wrong. What happens is that a minister makes arecommendation to the Prime Minister. If the Prime Minister approves, then that is the endof the matter. If the Prime Minister says that the matter should go to cabinet, then it goes tocabinet. My recollection is that it went to cabinet, at least nominally, in my name.

Senator FAULKNER—Whose idea was it?Senator Alston—You know what these things are like; it is a matter of osmosis really. We

talk to a wide range of people, we take the best possible advice, and we make the bestdecision.

Senator FAULKNER—Do you know if Mr Barnett’s view of Aboriginal history was takeninto account when this appointment was made?

Senator Alston—I think you can probably assume that people were aware of Mr Barnett’scredentials when they approved his appointment.

Senator FAULKNER—I am sorry, that does not really answer the question, with respect.Senator Alston—If you are asking me whether we specifically discussed particular views—

apart from saying that I would not think it appropriate to canvass those matters—it would befairly unusual to have regard to someone’s specific views unless they were of overwhelmingsignificance. I think Mr Barnett’s credentials were such that cabinet would have been verycomfortable with him as someone who would add value to the museum.

Senator FAULKNER—Was a letter sent from the Department of the Prime Minister andCabinet to the department of communications in relation to a request that Mr Barnett beappointed to the board?

Senator Alston—Was there a letter from the department? Not to my knowledge.Ms Casey—Not that I am aware of.Senator FAULKNER—Was there a letter from the Prime Minister or the Prime Minister’s

office at a ministerial level? Do you know, Senator Alston?Senator Alston—I would be very surprised. No; I do not think so.Senator FAULKNER—You do not think so? The Prime Minister just did it on the phone

and ordered you to put him on, did he?Senator Alston—No; I think it was very much a matter of recommendations being made

to the Prime Minister.Senator FAULKNER—So it was Mr McGauran’s idea?Senator Alston—As I say, these things are a matter of osmosis.

Senator FAULKNER—It is an interesting osmosis, isn’t it? His name did not come forwardfrom the museum, so it was late osmosis—



Senator Alston—There is nothing unusual about that. If you simply took recommendationsfrom the body to which you were going to appoint someone, then it is all very much in-house.We are looking to add value, and we want to make sure you get a range of views.

Senator FAULKNER—Since you have been minister for communications, do you knowhow many appointments have been made to the board of the National Museum?

Senator Alston—I suppose you mean as minister for the arts?Senator FAULKNER—I am sorry, as minister for the arts. The department keeps

changing—Senator Alston—I cannot remember. I think it is four or five.Ms Casey—About that. We will have to take that on notice. I do not know exactly.Senator Alston—Four or five.Senator FAULKNER—What are you called now—minister for communications and—Senator Alston—IT.Senator FAULKNER—In shorthand, we call the department DOCITA nowadays, don’t

we?Senator Alston—You may.Senator FAULKNER—No; I am asking what you call it?Senator Alston—I still call it DOCA!Senator FAULKNER—Not privately. What do you call it publicly?Senator Alston—We just press the hot line and away you go!Senator FAULKNER—If I just call it the department of communications, you will

understand what I mean?Senator Alston—Absolutely. Yes, I do.Senator FAULKNER—Could you answer the question?Senator Alston—Four or five.Senator FAULKNER—Can you tell me how many of those appointments have been drawn

from recommendations or short lists developed by the museum itself?Senator Alston—I have no doubt that the museum had an input. It is normal practice to

consult and, if not, the museum itself is obviously aware when vacancies are scheduled tooccur and can volunteer names. But, at the end of the day, everyone knows that it is a matterfor government, and we usually turn our minds to these things well in advance, unlike ourpredecessors who seemed to leave gaping holes for months on end. We were just appalled—

Senator FAULKNER—I would not have asked these questions except you were so latein coming to this estimates.

Senator Alston—I had a prior commitment with a higher priority.Senator FAULKNER—On Monday you were caught in a traffic jam for over three-quarters

of an hour. I hope you did not run out of petrol.Senator Alston—No.Senator FAULKNER—The only reason I ask these questions is that, while I was twiddling

my thumbs waiting for you to come, I read this article.Senator Alston—I know you are a busy man.



Senator FAULKNER—Yes, I am pretty busy; but I had a bit of spare time, thanks to you.So I read this article ‘The chosen couple’ and it said here:A spokeswoman for McGauran was unable to explain this week precisely what ‘perspective’ Barnett mightoffer.

Is that what the spokeswoman said?Senator Alston—I would not know because I was not there when the spokesman or woman

was interviewed but, more importantly, it would be inaccurate to say that there were no obvi-ous grounds for Mr Barnett’s appointment. So any well-informed spokesman or woman wouldhave pointed to Mr Barnett’s experience and knowledge of community issues, current affairs,government, journalism and the media.

Senator FAULKNER—I am just quoting from the article, Senator.Senator Alston—Yes. I am saying you cannot rely on articles. You know that.Senator FAULKNER—I am not relying on the article. I was wondering whether you were

relying on the spokeswoman.Senator Alston—As I say, I was not there to know whether the spokeswoman was

accurately quoted, but I would be surprised if—Senator FAULKNER—So the spokeswoman is wrong is what you are saying?Senator Alston—If accurately quoted.Senator FAULKNER—If accurately quoted?Senator Alston—If accurately quoted, the spokeswoman was probably economical in

expressing the breadth of Mr Barnett’s credentials for the position.Senator FAULKNER—I did not think you would be there, but given that you were not

there, would you mind taking that on notice and just letting us know?Senator Alston—Whether the spokeswoman was accurately quoted?Senator FAULKNER—Correct, yes.Senator Alston—Yes; I could certainly do that.Senator FAULKNER—Thanks very much. I appreciate that. It says also in the article that

Mr McGauran—I think she says McGauran—Senator Alston—I know you are a stickler for protocol.Senator FAULKNER—I am; I am a stickler for protocol and titles. It says:

McGauran, the responsible minister, had little to do with it.

Is that right?Senator Alston—Had little to do with it?Senator FAULKNER—The appointment of Mr Barnett.Senator Alston—No, that is not right.Senator FAULKNER—That is wrong too?Senator Alston—Absolutely; he should sue for defamation.

Senator FAULKNER—Could you take on notice whether he is suing for defamation?

Senator Alston—I do not think he is because he has got more important things to attendto, but it would be easy money if he were so minded.



Senator FAULKNER—So you have been able to give a definitive answer on that aspectthat he is not suing for defamation.

Senator Alston—I am happy to give free legal advice.Senator FAULKNER—No, I do not want legal advice; I just want to know whether Mr

McGauran is suing for defamation. But thank you for that. Then it says here—Senator Alston—Well he might as a result of tonight, but he has not to date, I do not think.Senator FAULKNER—Well, good luck! And that refers to Mr McGauran. It says:

His immediate boss, the Communications Minister, Richard Alston, had even less of a hand in theappointment.

Senator Alston—I read that. I was outraged.Senator FAULKNER—Did you take that up with the journalist?Senator Alston—No, I was out of the country, but—Senator FAULKNER—You were not outraged enough to take it up with the journalist?Senator Alston—No, I thought, ‘It is just another example’—it sort of confirms your

prejudices, really.Senator FAULKNER—So the journalist is wrong in that regard too?Senator Alston—Yes.Senator FAULKNER—Is it true what the same journalist says:

Despite officially being appointed by McGauran, Barnett was given the post by Howard’s political adviserAnthony Benscher.

Is that right.Senator Alston—No. These things are not the gift of employees of government; they are

cabinet appointments. So, quite clearly, the article is demonstrably wrong on its face.Senator FAULKNER—So did Mr Benscher have a role in advising Mr Barnett of his

appointment?Senator Alston—I cannot say whether there was any—Senator FAULKNER—You should know who would, because it is your department, after

all; you are the minister for the arts, you were telling me.Senator Alston—That is true. Whether or not Mr Benscher might have had a discussion

with Mr Barnett is beyond my knowledge, but—Senator FAULKNER—How was he officially informed—can someone tell me that?Senator Alston—That he got the job?Senator FAULKNER—Yes.Senator Alston—I do not know. We normally advise people by letter from the minister for

the arts.Senator FAULKNER—I see, by letter from the minister for the arts.Senator Alston—Formally, yes.Senator FAULKNER—Did anyone ring him up and check beforehand that he might want

the job? How did you know he wanted it?Senator Alston—I think it is usual practice to make sure people are available.



Senator FAULKNER—I would agree with you. Who rang him up? Who contacted himformally to make sure he was interested?

Senator Alston—I do not know. Often, the department does these things.Senator FAULKNER—Can you find out for me?Senator Alston—We could have a look at it for you, yes.Senator FAULKNER—If you do not know, can an officer of the department help us with

that?Senator Alston—No, I am advised.Senator FAULKNER—Well can someone tell me did—Senator Alston—We will make some inquiries.Senator FAULKNER—I want to know whether an officer of the department of

communications and the arts, or one of the two relevant ministers—you or Mr McGauran—canvassed Mr Barnett as to whether he would be interested in fulfilling this function.

Senator Alston—I think you can safely assume that Mr Barnett was prepared to have hisname go forward. I do not think the department—

Senator FAULKNER—I accept that.Senator Alston—I do not think the department contacted him, so somewhere else must—Senator FAULKNER—Did you contact him, Minister?Senator Alston—No, I do not think I—Senator FAULKNER—No. Okay. Well—Senator Alston—But I would not normally—Senator FAULKNER—your department did not, and you did not, so it does look like there

just might be an involvement here from Mr Benscher. I think you were too critical of thatjournalist too quickly.

Senator Alston—Do you think so? There are a range of people who would make contactwith potential appointees. I normally would not ring people who are likely to be appointed.

Senator FAULKNER—Oh, you wouldn’t normally?Senator Alston—I do from time to time.Senator FAULKNER—You just throw up their names and if they say, if they get appointed

by cabinet, ‘We do not want the job—bad luck,’ you would look a bit of a goose, wouldn’tyou?

Senator Alston—Absolutely, so you would check them out.Senator FAULKNER—I know you are getting used to that but, heavens above, with every

appointment that comes forward you would not want to look like a bit of a dope who is puttingforward people for important appointments who do not want the jobs. You have got to checkit out.

Senator Alston—We simply ask them their Labor Party membership number and, if we havenot got one, we put their name on the list!

Senator FAULKNER—It just goes to show how thorough you are—except in this case.Senator Alston—You have to be.



Senator FAULKNER—In this case your department had no involvement and you had noinvolvement. You dropped the ball on this one.

Senator Alston—No—

Senator FAULKNER—What about Mr McGauran—did he have any involvement?

Senator Alston—It is not unusual for a minister not to make a personal call, but normalfor others to do it on the minister’s behalf.

Senator FAULKNER—Well did your office do it, Minister?

Senator Alston—I do not recall offhand.

Senator FAULKNER—Could you find out for me?

Senator Alston—I could make some inquiries.

Senator FAULKNER—I appreciate that. You might take that on notice. You might takeon notice whether Mr McGauran made the call to offer the appointment to Mr Barnett.

Senator Alston—Do you think it is so critical?

Senator FAULKNER—As I said, if I had not had a couple of hours to cogitate on thematter I probably would not be raising it now, but I thought I would just punish you forkeeping me waiting. So you can check it out with Mr McGauran and his office and with yourown office, if you are not certain. We know about the department—you have advised us thedepartment did not ask Mr Barnett whether he wanted the appointment. Can you take thosequestions on notice?


Senator FAULKNER—Thank you, Minister. Could you also take on notice who did contactMr Barnett to offer him the job?

Senator Alston—I will make all the necessary inquiries. I will give it all the attention thatit deserves.

Senator FAULKNER—I appreciate that very much, I really do. This same article that Ihave just had the opportunity to read because you were so late coming to the meeting says:But it is known that Alston was not informed of it first.

I want to know, Senator Alston, when did you find out about Mr Barnett’s appointment?

Senator Alston—I have a very distinct recollection of canvassing Mr Barnett’s name,amongst others, as a candidate for the position—

Senator FAULKNER—How did you find out about this name?

Senator Alston—so it would be quite incorrect to say that I was informed after the event.

Senator FAULKNER—But he was not your idea, Senator Alston. It was not your idea toappoint him.

Senator Alston—As I say, a number of people are usually involved in these decisions.Precisely who first came up with his name is lost in the mists of time.

Senator FAULKNER—It wasn’t you, though, was it?

Senator Alston—It could well have been.

Senator FAULKNER—You do not know whether it was you who came up with his name?

Senator Alston—I would not rule it out.



Senator FAULKNER—You would not rule it out. Come on! I think you have got to doa little better than that, Minister. Was it your idea or not?

Senator Alston—As I say, I would like to be able to give you a yes or no on that, but thereare some things that are a bit uncertain and this is one of them. Suffice to say—

Senator FAULKNER—You do not know whether it was your idea?Senator Alston—No, it is often the case that you have a lot of people around you, a lot

of good ideas, and they all like to claim credit after the event. Being modest about thesethings, I am quite happy to defer to them.

Senator FAULKNER—I am sure you will claim credit after the event. I just wanted toknow whose idea, before the event, it was.

Senator Alston—I do not recall.Senator FAULKNER—You do not know whose idea it was?Senator Alston—I do not think I took notes at the time.Senator FAULKNER—So you do not know whether you came up with the idea of Mr

Barnett?Senator Alston—No, I do not. But I do recall canvassing his name.Senator FAULKNER—Who can we get to jog your memory, do you think?Senator Alston—I think you would have a great deal of difficulty, because we actually

regard the outcomes as more important than the inputs.Senator FAULKNER—But don’t you think it would worry a few people to have a minister

of the Crown not knowing whether he had the idea to appoint Mr Barnett to the board of thenew National Museum of Australia?

Senator Alston—No. We are more concerned with the right outcome. The results are whatmatter.

Senator FAULKNER—So it does not matter that you do not know whether it was youridea or not? You are kidding, aren’t you?

Senator Alston—No. Maybe the culture is different with us in government, but we are notbreaking our necks to claim credit for things. We just want them to be right, and as long as—

Senator FAULKNER—That is not an issue. I just wanted to know whether it was your ideaor not—and you cannot even tell me that.

Senator Alston—No, I cannot tell you that.Senator FAULKNER—Why can’t you tell me?Senator Alston—Because I cannot remember. It may well have been—I am not dismissing

the possibility for a moment. I have come up with most of the recommendations in my area.It is pretty demanding.

Senator FAULKNER—But not this one?Senator Alston—I may well have come up with this one too but—Senator FAULKNER—Yes, but you do not know?Senator Alston—I do not want to claim credit unnecessarily.Senator FAULKNER—So the article saying:

But it is known that Alston was not informed of it first.



is—Senator Alston—As I said, that is outrageous. I will not get further provoked, but it is

wrong.Senator FAULKNER—So the statement:

But it is known that Alston was not informed of it first.

is wrong?Senator Alston—Absolutely, yes.Senator FAULKNER—All right. Is this statement correct:

Indeed, Barnett originally was to be offered something "considerably more important", according to onesource, and such was the alarm within some sections of the Government that the Museum Council positionwas found as a face-saving compromise.

Is that right?Senator Alston—It sounds like media hyperbole to me.Senator FAULKNER—Let us hope that your recollection in relation to the sequence of

events is accurate and that you have not mislead the committee, Senator.Senator Alston—I certainly would not be doing that.Senator FAULKNER—Can you let me know what the valuable perspective is that Mr

Barnett will be bringing to the National Museum?Senator Alston—I thought I made that clear.Senator FAULKNER—No, I do not recall that.Senator Alston—He has impeccable qualifications in the areas of community issues, current

affairs, government, media, broadcasting and journalism.Senator FAULKNER—I see. What do you think he brings in relation to his view of

indigenous Australians and Aboriginal history?Senator Alston—I do not know.Senator FAULKNER—That is important for the museum, isn’t it?Senator Alston—Oh yes. I think there are a lot of issues the museum will have to address

which require serious attention.Senator FAULKNER—The only reason I ask is that, as you know, in his writing he is very

critical of the so-called black armband view of Aboriginal history.Senator Alston—He is not Robinson Crusoe in that. It is not a criminal offence to espouse

that view.Senator FAULKNER—I am not suggesting it is a criminal offence. I just said that, as you

know, that is the case. Minister, perhaps, through you, I could ask Dr Jonas for a view on this.Senator Alston—I do not think it is appropriate.Senator FAULKNER—Why not?Senator Alston—You are asking public servants—

Senator FAULKNER—I am asking you and you do not have a view on any of these things.You cannot even remember whether it was your idea or not.

Senator Alston—I am pleading guilty.



Senator FAULKNER—At least Dr Jonas and the other officers at the table remember thatit was not their idea. At least they know that. They are an awful long way in front of you.

Senator Alston—I think we are in heated agreement on that. But it does not follow thatit is proper for public servants to be asked to express an opinion on particular appointees. Itputs them in an invidious position.

Senator FAULKNER—It does not follow, but that is what I would like to do.Senator Alston—You would love to do it, I know, but, if you have a modicum of decency

about you, you would understand that it is not appropriate for public servants to be put in thatposition.

Senator FAULKNER—I am sure that somewhere you will find a modicum—not muchmore than a modicum, but I am sure you will find it there somewhere. Anyway, I would liketo ask Dr Jonas that.

Senator Alston—I am just telling you that Dr Jonas should not answer that question.CHAIR —You are well within your rights not to answer, Dr Jonas.Senator FAULKNER—Mr Chairman, I did not want to ask questions about that program,

I wanted to ask questions about subprogram 1.1, so why don’t we move to that.[10.28 p.m.]

Subprogram 1.1—Arts and heritage policy

Senator FAULKNER—Mr Chairman, I did ask Mr Stevens, while the minister was caughtin a traffic jam, a general question about the assistant media monitor, which is a new job thatI had been informed had just been advertised in theCanberra Timesin late January. We mightjust conclude that and then move straightaway to the program element, if that is okay.

I have now been informed that the department has moved away from having previouslyoutsourced the media monitoring function. That is correct, isn’t it?

Mr Stevens—That was actually done some time ago.Senator FAULKNER—Do you know when that was, Mr Stevens?Mr Stevens—A couple of years ago, at least.Senator FAULKNER—And it is now done in-house. I was just interested to know whether

the monitoring unit has been expanded at all. There was obviously some expansion, becauseyou have a new person.

Mr Stevens—As I said earlier, we have a full-time person and there was a part-time casualperson helping, particularly on Tuesday and Wednesday mornings. This is actually formalisingthat particular position.

Senator FAULKNER—What type of media are being monitored?Mr Stevens—Newspaper clips from all major metropolitan newspapers, primarily.Senator FAULKNER—Any electronic media monitoring?Mr Stevens—Yes, they have access to the local television stations and the local radio ABC.Senator FAULKNER—What are you doing with the clips when you get them?

Mr Stevens—They are distributed around the department, to the minister, to the shadowminister and to a number of other people.

Senator FAULKNER—What about the electronic media records?



Mr Stevens—That is basically a taping issue. If someone wishes to see a tape ofFourCorners, we can provide that tape to an officer.

Senator FAULKNER—Did you continue the monitoring function as per normal during theelection campaign?

Mr Stevens—We certainly did the press clips during the campaign, yes.Senator FAULKNER—This is not intended to be a curly question, I am trying to establish

it. Also the electronic media?Mr Stevens—As far as I am aware, there was no change to anything.Senator FAULKNER—Clips, as you say, are provided to the minister and shadow minister,

which is as it should be.Senator Alston—You are dead right. When we were in opposition, Michael Lee refused

to give me copies. Even though I pleaded with him, he did not do it. So you are right, hedeserves condemnation.

Senator FAULKNER—You should have been the shadow minister for the environment.The shadow minister for the environment got all clips, and I was delighted to give them tohim because I knew it would ruin his morning. He got them, and so did the shadow ministerfor sport.

Senator Alston—You should have advised Mr Lee.Senator FAULKNER—As a matter of fact, I am sure I would get clips now from the

respective departments if I asked. I get them from the AEC, and I appreciate that. Ministershave to cooperate to ensure that occurs. Can someone assure me that none of this material isbeing passed on to the Liberal Party?

Senator Alston—Not by me. I do not think you would need to. I think they manage toassemble their own quite effectively. I can assure you I get material from the Liberal Partybefore I get it from the department.

Senator FAULKNER—All I am asking is that we can be assured that the mediamonitoring—

Senator Alston—During the election campaign I was getting it at 4.30 in the morning.Senator FAULKNER—Bully for you.Senator Alston—It worked, though, didn’t it?Senator FAULKNER—Do you mean they made you so tired you could not get out of bed

and make too many mistakes during the campaign? I am pleased to hear that.Senator Alston—I was on the job 24 hours.Senator FAULKNER—Good on you. I just want to be assured that the department ensures

that the media service, which sounds perfectly reasonable the way you described it, is notfalling into the wrong hands. If I can be assured of that, I am happy.

Senator Alston—It does—it goes to the shadow minister, but we are not objecting to that.Senator FAULKNER—It goes to the minister and the shadow minister. I am certainly not

arguing about that. It is internal to the department. Does it go to any other departments ofgovernment that you are aware of?

Mr Stevens—The Prime Minister’s office.Senator FAULKNER—Where else does it go?



Mr Stevens—I do not think it goes anywhere else, but I will take that question on notice.

Senator FAULKNER—If you could take that on notice, I would appreciate it. I understandthat it is circulated in DOCA, or DOCITA, the Prime Minister’s office, shadow minister andminister—

Mr Stevens—Mr McGauran and Senator Ian Campbell, the parliamentary secretary.

Senator FAULKNER—Apart from those aforementioned, can you take on notice if themonitoring service is provided to any others and, if it is, who they are?

Mr Stevens—Certainly.

Senator FAULKNER—Thank you. That was the only general question I had, Mr Chairman.I do not think that falls within 1.1, but I have been waiting since 9 o’clock this morning toask the question.

CHAIR —You must feel very pleased at having got there.

Senator Alston—And to think it could have been put on notice.

Senator FAULKNER—I could have put my questions about Mr Barnett on notice, but yougave me the opportunity to read the article. So there you are. I have finished my general ques-tions and I have finished my questions on program 1.8. Now I would like to turn the clockright back to program 1.1 specifically, which I think is the next program we are going to dealwith.

CHAIR —As it happens, it is.

Senator FAULKNER—Mr Chairman, the only questions I want to ask here—and this willconclude my questioning—relate to the Federation Fund and those elements of the culturaland heritage Federation Fund which are administered by the Department of Communications,Information Technology and the Arts. Can I say, Minister, that I did ask your counterpart,Senator Hill, who has joint responsibility, his department and Environment Australia a numberof questions in relation to this too. I am going to try to ensure, given the lateness of the hour,that I am not repetitive.

CHAIR —That is very important, Senator.

Senator FAULKNER—I agree, Mr Chairman. So why don’t we just bat on. Senator Hillinformed me that, effectively, the unit that was responsible for the administration of the feder-ation cultural and heritage projects program actually is located in your department. That is thecase, isn’t it?


Senator FAULKNER—How many staff from your department are working within thatgroup?

Mr Palfreyman —At the current time, there are approximately eight officers working notonly on this particular program but other associated programs from the Federation Fund.

Senator FAULKNER—Would that include elements of the major Federation Fund that havebeen allocated for administration by the department of communications?

Mr Palfreyman —Indeed, and also the Federation Community Projects Program, which isthe $200,000 per federal electorate.

Senator FAULKNER—Where is that up to? I realise it is a pretty centralised process, butwhere are we on that?



Mr Palfreyman —Members are asked to submit their proposals by the 26th of this month.They will undergo some assessment within the department to ensure that the projects complywith the guidelines. It is intended that they be put to ministers towards the end of April, withsome announcement probably in May.

CHAIR —Before you go on, Senator Faulkner, I have been advised that the tea and coffeemachines will be going off at 11.

Senator Alston—I thought we were going off at 11, actually.CHAIR —We will be going off reasonably soon afterwards, hopefully, Minister, if we move

quickly.Senator FAULKNER—You will be going off three-quarters of an hour after at least. That

was the period of time that you were late. But I do not think it will take that long, if we canmove along.

CHAIR —I think we should make our questions focused and get to the point, SenatorFaulkner, and we can deal with it quickly. People might like to get tea and coffee before itgoes off at 11.

Senator FAULKNER—As I understand it, the departments put a list of projects to ministerswhich effectively had scaled scores. Is that a fair summation of how matters were presentedto ministers?

Mr Palfreyman —That is correct, Senator. There were no specific recommendations but eachproject was given a score out of a maximum of 24.

Senator FAULKNER—We spent some time in the environment estimates talking aboutthe significance of the 15 mark. Even though there were categories 12 to 18, above 18, below12 and ineligible projects, there was some consideration of the score of 15. Could you explainto me, from the perspective of your department, the significance of the 15 score?

Mr Palfreyman —I do not believe that there was anything terribly scientific about it butI would make a couple of comments. One is that I think it was the judgment of officers doingthe assessment that projects scoring 15 and above were probably worthy of support in termsof the six criteria against which they were assessed. In fact—I would need to check thefigures—that group of 15 and above gave ministers something in excess of 100 projects fromwhich to choose, totalling, I think from memory, about $250 million.

Senator FAULKNER—Would you mind taking on notice the precise number. I did receivea number, I might say, from environment.

Mr Stevens—The precise number is 114.Senator FAULKNER—That was the evidence I got last night. I just wanted to check that

we are talking about the same figure. Thank you for that. So what does that mean for projectsbelow 15? I hear what you say about those 15 and above. What would you say about thosebelow 15?

Mr Palfreyman —In terms of the officers doing the assessment, they did not rank as highly.In other words, they were less worthy, I guess.

Senator FAULKNER—How many of the less worthy projects were approved by ministers?Let me put this another way without the spin, just so we are clear. How many projects scoringless than 15 were approved by ministers? I did not want to use your terminology.

Senator Alston—We think a dozen or less.Senator FAULKNER—Senator Hill told me there were 12.



Senator Alston—That is about right.Senator FAULKNER—I am just checking. Given that this unit, Senator Alston, is actually

in your department, I just thought it was useful to run over the target again, very briefly, onthose statistics. That does, I might say, completely support the evidence that was given bySenator Hill’s department.

Senator Alston—So far so good.Senator FAULKNER—Does Mr McGauran have primary responsibility for the National

Council for the Centenary of Federation? I assumed he did but I was not sure.Senator Alston—Yes, that is part of his title.Senator FAULKNER—Could you provide for the committee the names of the 12 projects

that scored less than 15?Senator Alston—As you have already indicated, consistency is a virtue, and I think Senator

Hill might claim that it would not be fair to unsuccessful applicants to have their projectssingled out or put at a particular level in terms of what the department’s cut-off point mightbe. Other than identifying the successful applicants, I do not think we would want to somehowrank any of the others.

Senator FAULKNER—Can I ask if the Historic Female Factory Site in Tasmania rankedless than 15?

Senator Alston—I do not think we can indicate that, consistent with what I have just said.Senator FAULKNER—Can I ask what the ranking of the Commonwealth Technology Park

was—if that is in your department? I am not entirely sure.Senator Alston—Yes, that was not one of these. I think that got $25 million, so that would

have been a major Federation—Senator FAULKNER—Is that a major project?Senator Alston—Yes.Senator FAULKNER—I was not sure. I will not ask you for its ranking because it will

not have one. So you are unable to let me know what the ranking of the Historic FemaleFactory Site was?

Senator Alston—Yes.Senator FAULKNER—Okay. I will ask a question through you, Senator, and perhaps the

secretary. I have had some advice that would suggest that this information would be FOIable.I just wondered if that would be your view.

Senator Alston—You are asking for a legal opinion?Mr Stevens—That is something I would take legal advice on, Senator.Senator FAULKNER—Sorry?Mr Stevens—I would have to take legal advice on that issue, on FOI; it is not something

I could answer off the cuff.Senator FAULKNER—I thought you, or an FOI officer, might be able to answer that pretty

quickly.Mr Stevens—I am sure he could—Senator FAULKNER—I sought legal advice and I got a pretty quick answer.Mr Stevens—We do not have the person here tonight.



Senator FAULKNER—I see.Mr Stevens—It is our legal section.Senator FAULKNER—You might let me know at some stage—but events might overtake

it, I suppose. What I did not ask Senator Hill about was what occurred after departmental sub-missions were presented to ministers. Can you give me the date of submission to ministers,please?

Senator Alston—Advice was received on 7 August from the National Council for theCentenary of Federation and on 14 August from the Federation Task Group within thedepartment.

Senator FAULKNER—Would you mind just running me quickly through the timetableof key dates as far as the department of communications is concerned?

Mr Palfreyman —We could provide you with a list or I can read it intoHansard.Senator FAULKNER—If I could get a copy of it, that would save a bit of time. Let us

do that, if that is okay.Mr Palfreyman —Yes.Senator FAULKNER—If you would table that, that would be great.Mr Palfreyman —Yes.Senator FAULKNER—I might come back to that. Chair, it might be useful just to get the

list quickly. It might speed things along a bit.Senator FAULKNER—Can we check our acronyms, Mr Palfreyman, so I am absolutely

certain of what we are talking about in the fifth line?Mr Palfreyman —The first one is the Australian Council for National Trusts. The second

one is the International Council of Monuments and Sites.Senator ALSTON—‘MO’ stands for ‘monuments’.Senator FAULKNER—I am pleased that you had to seek advice, Mr Palfreyman!Mr Palfreyman —I just wanted to make sure I got it right.Senator FAULKNER—Yes, so did I, I can assure you. In the line: ‘On 14 August,

Federation Task Group advised to Senator Alston re: selection,’ is that limited to you, SenatorAlston, just because this has been generated in your department?

Senator Alston—Yes, I think that is right.Mr Palfreyman —The advice was provided to both ministers.Senator FAULKNER—So that could easily say ‘Senator Alston and Senator Hill re:

selection’.Mr Palfreyman —That is correct.Senator FAULKNER—The Federation Task Group, as I understand it, effectively developed

advice for submission to Senator Hill and Senator Alston jointly.Mr Palfreyman —That is correct. The task group actually operated as a whole. It was not

two groups within the department. The way in which the individual projects were assessedwas that each project was assessed by at least two senior officers independently and that advicethen went to ministers jointly.

Senator FAULKNER—The last line states, ‘Ministers write to the department advising ofreasons for decisions.’ Could you let me know what that means?



Mr Palfreyman —We said earlier that 12 of the projects were not in the highly ratedcategory. Ministers advised the department earlier about the ones that had been supported butthen wrote decisions against those that were supported.

Senator FAULKNER—So, after the advice of the Federation Task Group to ministers on14 August and final recommendations by ministers for forwarding to the Prime Minister on27 August, do we have any interplay between ministers and the department in relation tofurther advice on any or all of the projects?

Senator Alston—I think the short answer is no because we had already taken our decisions.There was no need for any further departmental advice.

Senator FAULKNER—You misunderstand me. I am talking about before you took yourdecisions.

Senator Alston—We took our decision prior to 27 August.Senator FAULKNER—No, you took your decision on 27 August.Senator Alston—No, that was when we forwarded the recommendation.Senator FAULKNER—I think, with respect, Minister, that was when you took the decision,

wasn’t it? If it was not, tell me when the decision was taken.Senator Alston—I do not know. I presume it was on or about that date. This is simply a

record telling us that was when we forwarded the recommendation. We may have made it anytime between—

Senator FAULKNER—Can someone tell me when ministers took the decision? When didministers sign off the brief that approved the expenditure of $70.3 million of public money?I think it was the 27th, Minister, but you are doubtful, so let us be clear.

Senator Alston—If you are asking when we actually met and agreed, I cannot recall that.I will check it out. What this is telling us is that we advised the Prime Minister of ourrecommendations on 27 August.

Senator FAULKNER—So you will take the timing of your meeting with Senator Hill onnotice?

Senator Alston—Yes.Senator FAULKNER—Are minutes kept of those meetings? How do you record decisions?

Is there a departmental record-taker present?Senator ALSTON—I do not think so.Senator FAULKNER—You would know.Senator Alston—Not departmental, but I think notes were taken generally by members of

staff.Senator FAULKNER—So there is no departmental record-taker there when you and Senator

Hill sit down and work out how you are going to spend $70 million of public money?Senator Alston—No, I do not think there was any departmental officer present.Senator FAULKNER—Who recorded the decisions?Senator Alston—Who recorded them?Senator FAULKNER—Yes.Senator Alston—We did and our staff did.Senator FAULKNER—So there was no departmental involvement in—



Senator Alston—There was no need. They had given us the recommendations.Senator FAULKNER—I am just asking. You say there was no need.Senator Alston—Yes.Senator FAULKNER—There was no departmental involvement in the drafting of the letter

to the Prime Minister?Senator Alston—That is a separate question.Senator FAULKNER—It is a separate question.Senator Alston—I assume not.Senator FAULKNER—Did the department help to draft the letter?Senator Alston—We think they probably did, but—Senator FAULKNER—You assume not. They think they probably did.Senator Alston—I assume not. They think they might have. So that is not inconsistent.Senator FAULKNER—You have the department with you there, Senator Alston. This one

we can establish before we move on.Senator Alston—I am not sure we can, but to the extent—Senator FAULKNER—I would appreciate you trying.Senator Alston—We communicated our decision to the department, who drafted the formal

letter which constituted the recommendation which presumably Senator Hill and I signed andwas forwarded on the 27th.

Senator FAULKNER—I see. Can I ask by what method you communicated your decisionto the department?

Senator Alston—A list was transmitted to the department. It may have been faxed; we donot think it was carrier pigeoned and we do not think it was emailed. On that basis thedepartment then drafted the letter.

Senator FAULKNER—Who signed the list?Senator Alston—I do not know whether it was signed. I presume it was provided on the

basis that it had been approved. Signing the letter presumably was—Senator FAULKNER—You sent a list to the department to draft a letter to the Prime

Minister. Is that list on file in the department somewhere?Senator Alston—One assumes so, yes.Senator FAULKNER—That is not an answer, with respect. One does assume so, but that

is not an assumption—Senator Alston—We might even be able to give you a definitive answer here.Senator FAULKNER—I would appreciate it.Senator Alston—Yes.Senator FAULKNER—Thank you. We know it is on file at the department. We do not

quite know how it got there—one assumes it is not by osmosis this time—but it is eitherfaxed or hand delivered or something. How is the department able to verify that this was thedecision of ministers?

Senator Alston—I suppose they acted in good faith. They received something whichpurported to come from one or both minister’s officers and they took it at face value. I suppose



they do that on a number of occasions and most times it works out. As it turned out, of course,we signed the letter, so they could breathe a huge sigh of relief that they had not been victimsof a hoax.

Senator FAULKNER—How was the department able to verify that the communicationreceived at the department was the decision of ministers?

Senator Alston—I assume it did not just materialise out of nowhere. It either had a faxheader on it or someone has said they would send down the list, so they knew it was coming.They put it into the form of a letter, which we signed, so that validates the fact that it camefrom our offices. How do any communications get transmitted to departments? The usual—

Senator FAULKNER—I am trying to get to the process issues here. There is no-one inthe room from either department recording decisions that ministers are making for theexpenditure of public money. No-one knows how the hell your decisions get to the department.I think these are pretty reasonable questions about the way you—

Senator Alston—If the department says it got a document purporting to constitute a decisionof ministers and they then craft that into the form of a letter which a minister has signed, thenit turns out that they were right. In a sense, it really does not matter whether it got therebecause a courier took it down or because someone threw it onto the back of a truck whichwas going past or a staffer delivered it.

Senator FAULKNER—With respect, I think it does matter.Senator Alston—Does it? Why?Senator FAULKNER—I think it does matter. I am surprised that you would take your

public duties and responsibilities so lightly that you would think it does not matter if it arrivedon the back of a truck. You may not care, but I care. I would like to know. Can thecommunication from ministers’ offices—

Senator Alston—We will get the hound-dogs onto it and see what we can find out for you.Senator FAULKNER—That is good. For the benefit of the committee, can you table a copy

of the advice by ministers to the department after you made your decisions?Senator Alston—We will see what we can do on that score as well.Senator FAULKNER—I appreciate that, but it is a very vague answer.Senator Alston—Unless there is any good reason why we should not, we will provide it

to you.Senator FAULKNER—Can you tell me when you made the decisions, when the

communication to the department occurred and when the department drafted the letter to thePrime Minister. I do not think we know the answers to those questions, so could they be takenon notice?

Senator Alston—Yes.Senator FAULKNER—I think we do know, because you have tabled this information, that

the letter drafted by the department—I cannot say when it was signed—was forwarded to thePrime Minister on 27 August. I do not need to ask that question, but I would like answers tothe other questions.

Senator Alston—We will get you as much detail as we possibly can.Senator FAULKNER—Thank you. However, between 14 August and anywhere up to 27

August there was no interplay between ministers and the department regarding discussions



about projects that did not reach a score of 15? That is what you have told me, but I want tobe really clear about this, Senator Alston.

You have already told the committee, as I understand it, that between 14 August and up to27 August you did not talk to the department about these projects that you decided to elevate,even though they had a score of less than 15?

Senator Alston—I do not recall saying that, and I would be surprised if there was not atleast some level of discussion between staff in my office and the department. I do not haveany personal recollection of these things and maybe I did not have discussions, but I wouldbe surprised if there was not some level of discussion. To the extent there is notice of that,we will advise you.

Senator FAULKNER—With respect, minister, the trouble is that you do not actually seemto know the answer to these questions. I am not suggesting you are being deliberately evasivehere, but you are not being entirely helpful. If you do not know, let us go the other route: whydon’t we try to establish from the department whether they know? They might just remember.Can I ask someone to check with the relevant departmental officials whether there was anytick-tacking after the departmental recommendations hit your desk and Senator Hill’s desk?I cannot say that you knocked off 12 projects, but did you elevate 12 projects that did not getto the threshold score of 15?

Mr Palfreyman —There was limited contact between the office and the department onindividual projects where officers in the minister’s office were seeking clarification of details.There was no discussion, though, on scoring or reasons for that.

Senator FAULKNER—What do you mean by ‘limited contact’, Mr Palfreyman?

Mr Palfreyman —Limited contact in terms of the number of cases or the number of projectson which there was discussion. I am told there were a few instances where officers inministers’ offices sought clarification of a factual nature on particular projects, but that wasnot extensive.

Senator FAULKNER—When this happens, this sort of tick- tacking—which is theexpression I am using here for want of a better one; I think we understand what it means;obviously it occurs between ministers and officers and departments—is that recordeddepartmentally? Would there be a file note or the like?

Mr Palfreyman —Senator, I am told that the contact that did take place was probably mainlyby telephone so that no record was kept, although we would need to check the email.

Senator FAULKNER—Okay. No record was kept. Check the email. Was there any face-to-face contact that you are aware of?

Mr Palfreyman —No.

Senator FAULKNER—Why I raise this is that you have these 12 projects that do not reachthe threshold. They are bunged in over the top of how many, did you say, reached thethreshold? It was an enormous number.

Mr Palfreyman —There were 114 that scored 15 or above.

Senator FAULKNER—Yes, there were 114 that scored 15 and above and there were 60approved. So there were 114 that scored 15 and above, there are 60 approved, and there are12 that did not get to the threshold that ministers decide to approve—contrary to the scoringsystem of the department. I reckon that is an interesting approach by ministers and I am



wondering, if you are going to do that, why you would not talk to the department about whyyou decided to approve them, given the department has scored them down.

Senator Alston—We were not just relying on advice from the department. We had advicefrom the council for the centenary federation whose advice, you will note, was provided on7 August. It was really a matter for us to decide ourselves, taking into account both inputsand the criteria that we applied.

Senator FAULKNER—Did any of the 12 projects receive a high priority from the NationalCouncil for the Centenary of Federation?

Senator Alston—I do not recall that.Senator FAULKNER—I am sure a departmental officer would be able to help us.Senator Alston—Some of the 12 were on the list of recommendations from the centenary

federation.Senator FAULKNER—What do you mean they were on the list of recommendations?Senator Alston—In other words, they recommended them.Senator FAULKNER—They recommended that they be approved?Senator Alston—Yes.Senator FAULKNER—Can you tell me how many?Senator Alston—No, I cannot. We would have to check that.Senator FAULKNER—Could you take that on notice?Senator Alston—Yes.Senator FAULKNER—Could you also take this on notice? I hope you will reconsider this

because it would be a little easier on all of us if you would front up and tell us what the 12projects were. But if you will not, can you tell us what proportion of the $70 million those12 projects comprise?

Senator Alston—We will see what we can do.Senator FAULKNER—I appreciate your seeing what you can do. Does that mean yes?Senator Alston—It means that, unless there is any good reason why we should not, we will.Senator FAULKNER—Thank you. Can I ask why on 5 November the letters went to the

department, or departments, advising of reasons for decisions and what the obligations onministers are in relation to that element of the timetable?

Senator Alston—I think the view was taken that it was desirable to have a formal record,certainly for audit purposes, and that we should therefore formally advise the department inwriting, and we did.

Senator FAULKNER—Why do the FCHP projects require prime ministerial approval?Senator Alston—I assume that that was part and parcel of the original structure.Senator FAULKNER—Thank you for that assumption. Now can we just be told what the

reason is?Senator Alston—It was, in fact, a cabinet decision that Senator Hill and I should make the

preliminary decisions and make recommendations to the Prime Minister, who would have theultimate say, in the same way that the major projects were approved.

Senator FAULKNER—I am sorry?



Senator Alston—In the same way that the major projects were approved.Senator FAULKNER—You said this $70 million of expenditure was shot off to the Prime

Minister on 30 August. When on 30 August did the Prime Minister approve these?Senator Alston—What time?Senator FAULKNER—Yes, what time?Senator Alston—I do not know whether he had his stopwatch going or not, but I will find

out if he did.Senator FAULKNER—The election was called on Sunday, 30 August, wasn’t it?Senator Alston—I do not know.Senator FAULKNER—Well, I do.Senator Alston—It was certainly around that time.Senator FAULKNER—Yes, it was around that time. In fact, it was called on Sunday, 30

August. I know you do not know. Just take my word for it; I do know.Senator Alston—I am sure you do. You were probably taken as much by surprise as I was.Senator FAULKNER—So we do not know what time the Prime Minister signs off on this.Senator Alston—If it is important, I can make some inquiries.Senator FAULKNER—It is important, Senator Alston.Senator Alston—I will make some inquiries.Senator FAULKNER—How often does the Prime Minister on the day he calls an election

sign off on grants to the value of $70.3 million?Senator Alston—I think it is safe to say it was unique. There would not be too many cases

when he would sign off on grants for $70.3 million.Senator FAULKNER—A bit shonky you reckon?Senator Alston—No, that is a unique figure in itself, and these were unique circumstances.Senator FAULKNER—What?Senator Alston—That a Prime Minister would be asked to sign off on Federation Fund

projects totalling $70.3 million. There has never been another occasion in the history offederation.

Senator FAULKNER—Can I ask Mr Stevens a question through you, Senator Alston, inrelation to the caretaker convention provisions? You can help me, minister, if you like, butI suspect this is probably a question for Mr Stevens. Has the department sought any advicein relation to the application of the caretaker convention to this process, which has ministersforwarding recommendations—and we do not know when they sign off on it—for theexpenditure of $70.3 million of public money on 27 August and the Prime Minister approvingit on the day he calls the election?

Mr Stevens—I am told we did seek advice.Senator FAULKNER—Can I ask who you sought advice from?Mr Stevens—It would have been Department of the Prime Minister and Cabinet, of course.Senator FAULKNER—Can I ask when you sought advice?Mr Stevens—I do not know offhand.Senator FAULKNER—Could someone help him with that, please?



Mr Stevens—We would have to get the exact date for you. I do not have it here.Senator FAULKNER—I would appreciate it. Can I ask why the department sought advice?Mr Stevens—Again, it was not done personally. I would have to find out the reason from

one of the officers concerned. I did not do it.Senator FAULKNER—Is there an officer who can assist us with that at all?Mr Palfreyman —I am not sure whether it was at the request of the minister’s office or it

was volunteered. I would need to check, that is all I am saying.Senator FAULKNER—Volunteered by whom?Mr Palfreyman —By the department.Senator FAULKNER—So you are not sure whether it was generated departmentally or at

the minister’s office.Mr Palfreyman —That is right. That is what I am saying.Senator FAULKNER—I see what you are saying. I would appreciate you taking that on

notice if there is no-one here who can assist us. I would appreciate you taking on notice whatinformation was requested of the Department of the Prime Minister and Cabinet, if you could,why it was requested and what the advice received by the Department of the Prime Ministerand Cabinet was. How many other grants programs in DOCITA require prime ministerialapproval?

Mr Stevens—I am not aware of any.Senator FAULKNER—So this is—as Senator Alston would say—unique?Mr Stevens—As far as I am aware, yes.Senator FAULKNER—Did the Prime Minister approve all the minister’s recommendations?Senator Alston—Did he approve all the ones that we put to him?Senator FAULKNER—In other words, did he tick off on Senator Hill’s and your

recommendations.Senator Alston—Yes, I think he did.Senator FAULKNER—I am not surprised to hear that, Senator Alston, because it is pretty

obvious where the fix went in, but I just wanted to make sure that there was not any late mailfrom Mr Nutt or somebody else who thought there was another marginal seat we had to worryabout.

Senator Alston—No, I think he relied on the good advice that he got.Senator FAULKNER—You think he relied on it.Senator Alston—He ticked off on them.Senator FAULKNER—He ticked off on them; thank you for that. Can I ask whether the

department had any concerns about the delay in writing to successful and unsuccessful appli-cants, given that the approval was on 30 August and the letter from ministers to successfuland unsuccessful candidates was on 13 October? Prime Minister and Cabinet provided adviceto Environment Australia and the DPIE, for that matter, on its NHT projects. Letters tosuccessful and unsuccessful grant applicants should be despatched without unnecessary delay.Was there concern at a departmental level that that was an unnecessary delay?

Mr Palfreyman —No. From the department’s viewpoint, that was during the election periodanyway.



Senator FAULKNER—So what?Mr Palfreyman —I am saying we were not concerned about the delay.Senator FAULKNER—How many of these 60 successful projects were announced actually

during the election campaign? I think I might know the answer to this one.Senator Alston—Do you think most of them do or all of them?Senator FAULKNER—Just have a crack at the question, but I think I might know the

answer to this one.Senator Alston—I bet you don’t.Senator FAULKNER—It is 59, is it?Senator Alston—What do you reckon?Senator FAULKNER—I have got no idea.Senator Alston—Twenty-six.Senator FAULKNER—Twenty-six were announced during the election campaign?Senator Alston—That, basically, blows your thesis out of the water, doesn’t it?Senator FAULKNER—I don’t think so. Were all announced before letters were sent from

ministers to successful and unsuccessful applicants?Senator Alston—Yes.Senator FAULKNER—Can someone give me a schedule of announcement dates for the

60 projects?Senator Alston—I am sure we can do that. We can certainly get that for you.Senator FAULKNER—But 26 of the 60 were announced during the election campaign.

The Prime Minister ticked them off, effectively, on the day the election was called. Theelection was on 3 October. Before you sent letters to successful and unsuccessful applicantsyou announced them all, you have told me. So that means 26 of 60 were announced duringthe election campaign and 34 of the 60 were announced in the 10 days after. Is that right?

Senator Alston—Very good.Senator FAULKNER—That is it?Senator Alston—Yes.Senator FAULKNER—It gets over the problem, doesn’t it, of having to front up to the

unsuccessful candidates during the election campaign if you get the crucial ones out there inthe marginal seats. It is not a bad strategy, Senator Alston. That is a complete breach of properprocess in the caretaker conventions, and of decency—but not a bad idea, politically, is it?

Senator Alston—I am interested to hear you say that. But I do not think it is a breach ofany convention.

Senator FAULKNER—What about the caretaker conventions that say:It is desirable if the decisions concern significant initiatives that they be announced in advance of thecaretaker period in order to avoid controversy.

Senator Alston—I do not know the precise detail of what the recommendation might havebeen. The advice I had was that, as long as the decision was taken prior to the announcementof the election, then it could be announced at any time thereafter.

Senator FAULKNER—Could I ask who gave you that advice?



Senator Alston—I think it was probably a staff member. I think I remember asking—Senator FAULKNER—A staff member gave you the advice that you could do it?Senator Alston—Yes.Senator FAULKNER—So you just did it? You cannot be seriously telling the committee

that.Senator Alston—Yes.Senator FAULKNER—What level was the staff member? Was it a departmental liaison

officer? Who was it? How did they know?Senator Alston—No. I think I would have asked one of my staff during the campaign period

if there was any difficulty about us announcing these decisions. I had a number of staffmembers with me down at campaign headquarters, so I suppose this must have come up fordiscussion.

Senator FAULKNER—So you do not really know? You know that someone advised you—Senator Alston—I do have a very distinct recollection of asking for advice and receiving

advice that, as long the decision had been taken prior to the calling of the election, then therewas no difficulty in announcing it during the campaign.

Senator FAULKNER—And it was a staff member who provided advice. Can you tell us:was this staff member an expert in the caretaker convention and provisions?

Senator Alston—I assume that advice was sought.Senator FAULKNER—Again, I would prefer not to work on your assumptions. So many

of them appear to be wrong.Senator Alston—I suppose in a perfect world that is probably fair enough.Senator FAULKNER—Yes. Unfortunately, I would not mind working on your assumptions

but so many of them have been wrong tonight. So far, you have got a pretty poor track recordon assumptions, so let us not assume. Can we establish it, please, Minister?

Senator Alston—I do not know that I can take it much further, other than to say that I havea recollection of asking for advice during the campaign and of being advised by one of mystaff that that was the ruling.

Senator FAULKNER—For the 26 of the 60 that were announced during the electioncampaign, who decided the schedule of announcements, the staggering of the announcementsthrough the election campaign period?

Senator Alston—I suppose it could have been a number of people who had anything to dowith that.

Senator FAULKNER—Of course it could have been a number of people. I am asking whoit was. It could have been any one of 18 million Australians, I suppose, but let us try anddefine it a little.

Senator Alston—I did not keep a campaign diary, and I suppose you were as busy as I was.There was a lot happening during that time. It might have been a bit quieter on your side, Ido not know—maybe you were sitting there like a stunned mullet—but we were working 23hours a day. As I said, I can recall discussing the matter but I certainly did not rush off andmake a note of it. As far as I was concerned I had the basis for the decision, and away wewent.

Senator FAULKNER—Was there any departmental involvement in the announcement?



Senator Alston—Down at campaign headquarters, no.

Senator FAULKNER—I am not talking about campaign headquarters. I do not knowanything about your campaign headquarters.

Senator Alston—I am saying that is where I was.

Senator FAULKNER—I am trying not to respond to your smart alec—

Senator Alston—That is where I was from that date until the election.

Senator FAULKNER—Okay, that is very interesting, but I am asking about theannouncement of a very significant expenditure of public moneys during the election campaign,and I would like to know—

Senator Alston—I would have made that decision in conjunction with Senator Hill byphone. I do not know that I ever saw him during that period, so I suppose I would have spokento him on the phone a few times about it, but we certainly did not talk to the department.

Senator FAULKNER—You certainly what?

Senator Alston—Did not talk to the department about any schedule of announcements.

Senator FAULKNER—So the schedule of announcements was made completely at aministerial level, was it?


Senator FAULKNER—Can I ask what departmental involvement there was in theannouncements and the functions around the announcements and the like. Perhaps thedepartment might like to answer that.

Senator Alston—None.

Senator FAULKNER—Any factual information supplied?

Senator Alston—I am advised not. The decisions had been taken.

Senator FAULKNER—I appreciate the decisions had been taken—

Senator Alston—So the department really would not have been able to add anything, andit was our call as to when we made the announcement.

Senator FAULKNER—The department may have provided some form of logistical supportin some way?

Senator Alston—For announcements? No.

Mr Palfreyman —No.

Senator FAULKNER—Are you aware of the caretaker provisions in relation to the supportof certain activities by ministers in relation to factual material?

Senator Alston—I think in view of the caretaker convention there was very little contactwith the department. We were basically running an election campaign—

Senator FAULKNER—No, you were not. You were out there announcing extraordinarynumbers of grants.

Senator Alston—That is true, too. We managed to do a lot of things.

Senator FAULKNER—Could I just ask, apart from seeking advice—we do not knowwhether it was departmental or ministerial but we will learn about that at some stage in thefuture—did the department seek any other advice from Prime Minister and Cabinet in relation



to the handling of the federation cultural and heritage projects, given the final approvals rolethat the Prime Minister had?

Mr Stevens—You mean did we seek PM&C input into the list of projects coming up?

Senator FAULKNER—That may be so, Mr Stevens. I suppose the only part of this I wasa bit surprised at was the Prime Minister signing this off on the day he called the election.I was not aware of the requirement for prime ministerial approval, but that was the nature ofthe cabinet decision. Sadly, I am not in the cabinet room so I do not really know what all thedetails of all cabinet decisions are.

Senator Alston—I do not like your chances of being there, either.

Senator FAULKNER—Because of that I was wondering if there was any other involvementwith PM&C.

Mr Palfreyman —Senator, if there had been contact there would not have been much, butI would like to take it on notice just to check exactly if there was at this period.

Senator FAULKNER—If you could, I would appreciate that, Mr Palfreyman, and perhapsif there was, you might let us know the nature of it.

Mr Palfreyman —Yes.

Senator FAULKNER—Can I just ask now about one specific project which I gave noticeof at the environment department estimates that I would be asking about?

Senator Alston—You gave notice there—are we meant to be fixed by that notice of it?

Senator FAULKNER—I was informed by very senior officials in your department that youwere apprised of the evidence before the environment department. A number of them haveinformed me of that and—

Senator Alston—I think I got a snippet of the selected highlights but I do not think I wasmade aware that you had given notice.

Senator FAULKNER—There are so many highlights on this side of the table, SenatorAlston, that it is not possible to have just a snippet, but yes, I did mention this project. Youwould appreciate that some of the information that has not been available publicly until I thinkthis round of estimates hearings concerns those projects that are administered by EnvironmentAustralia and those that are administered by your own department, so that is, I think, asubstantive point in relation to the administration of projects.

The project I wanted to ask about was the historic female factory site in Tasmania whichreceived funding to the tune of $975,000. Could I be informed what heritage plan is in placefor the restoration and conservation of the related women’s prison site, please?

Senator Alston—I presume Senator Hill would have told you that is his area ofresponsibility, so we plead ignorance.

Senator FAULKNER—No, he told me it was your area, Senator Alston.

Senator Alston—Well he was wrong. My advice is that it is being managed by theDepartment of the Environment and Heritage.

Senator FAULKNER—Senator Hill did table a document. Obviously no-one wantsownership of this one.

Senator Alston—No, it is his baby. There is no doubt about that.



Senator FAULKNER—You are absolutely sure of that? He says it is your baby. If it isSenator Hill’s baby we will ask Senator Hill at a later stage. I take your word for it—thenagain, I took his word for it. Who knows?

Senator Alston—You cannot win really, can you?Senator FAULKNER—The only problem I can perceive here, Minister, is if no one is

willing to take ownership of it.Senator Alston—As I said to Mr Stevens, success has a thousand fathers. I suppose it is

not surprising. I think we would both be claiming credit for it.Senator FAULKNER—The only good news in your answer to me—and I am not going

to take issue with it—is that it probably gets me out of here seven or eight minutes earlier thanI was otherwise going to get out of here.

Senator Alston—I think we have all got commitments elsewhere.Senator FAULKNER—That will probably be a relief to everyone.CHAIR —Have you finished, Senator Faulkner?Senator FAULKNER—At this stage, yes.CHAIR —Thank you.Senator FAULKNER—It depends on what else comes up. I am just getting warmed up.CHAIR —Senator Lundy has a lot of questions. She would like to take the committee

through to at least 1.00 a.m. Is that satisfactory?Senator Alston—No, I am afraid I have a commitment.CHAIR —Senator Lundy, do you want to—Senator LUNDY—So, Minister, you are refusing to stay?Senator Alston—I said I have got other commitments.Senator LUNDY—You have got other commitments. Minister, perhaps if you had been on

time earlier, we would have had the opportunity to finish—Senator Alston—Are these matters that you want to direct to me?Senator LUNDY—Yes.CHAIR —That is unfair, because you did ask questions during the time the minister was

not here, Senator.Senator Alston—I did indicate I would be a little late. There was no objection taken.CHAIR —But do you want to stay here until 1.00 a.m. when Senator Lundy may or may

not have finished or would you elect to go to a spillover time, which the secretariat advisesme could be on Tuesday or Wednesday night? We cannot get a quorum for tomorrow morning.

Senator Alston—I would not be available anyway. All right, Tuesday or Wednesday night.Senator LUNDY—So you are not prepared to stay so we can complete the program this

evening?CHAIR —Shall we get the secretariat to put together a meeting either on Tuesday or

Wednesday night?Senator LUNDY—I think he is refusing to stay.CHAIR —No, he has got another commitment.



Senator FAULKNER—What commitment has he got at 20 to 12? We would really liketo know.

Senator Alston—Never you mind.Senator FAULKNER—That will find its way into the newspaper. You should not have

said that. I am sure we can rely on you.Senator Alston—You will not have to rely on me—Senator FAULKNER—On the late night news, there will be people shocked all over the

building that you have got a commitment at 20 to 12 at night. You are kidding!CHAIR —You are probably jealous, Senator Faulkner.Senator FAULKNER—On that rather unfortunate note, you would have to be a really

miserable human being to hold him up, wouldn’t you?CHAIR —You certainly would, Senator Faulkner.Senator FAULKNER—We really would.CHAIR —Are you going to hold him up or not? The point is, Senator Lundy does have quite

a lot of questions.Senator LUNDY—As I advised you earlier, Chair, I think I would complete my questions

by 1.00 a.m. and was keen to do so given that it would finalise the program for DOCITA.CHAIR —The minister has indicated that he will not be staying.Senator LUNDY—Unfortunately, he is not able to stay.Senator Alston—We did say 11 o’clock. There is no particular reason why it needed to have

gone beyond 11. It is basically a question of filling the time available. You could have doneit in half the time if you had chosen to. You chose not to. If you want to go beyond theappointed time, then we might have to do something next week. But it is your call.

Senator LUNDY—Everyone else is prepared to stay except you, Minister.CHAIR —We will do it on Tuesday or Wednesday next week after the Senate rises and we

will leave it to the secretariat to arrange a spillover estimates. Senator Lundy, I think we needto identify which programs we need to call.

Senator Alston—What are these questions in the area of?Senator FAULKNER—You will just have to wait, won’t you?CHAIR —Certainly subprogram 1.1. Do you have any more on 1.8?Senator LUNDY—No. In fact, I place any remaining questions I have on 1.1 on notice and

just call NOIE and the Office for Government Online.CHAIR —So 3.6 and 3.7? Thank you very much for your attendance tonight.

Committee adjourned at 11.45 p.m.


commonwealth of australia official …...mr gabriel chan, manager, finance, australia council mr don...

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